Minnesota Economic Regulation Monograph 4

FEDERAL RE ULATI N F THE U~S~

D ARKETIN STEM

Miscellaneous Report AD-MRm2338 Agricultural Experiment Station University of Minnesota 1985

FEDERAL REGULATION OF THE U.S.

FOOD MARKETING SYSTEM

Tim Burke and Dale C. Dahl

Minnesota Economic Regulation Monograph #4

Minnesota Agricultural Experiment Station Miscellaneous Report AD-MR-2338

University of Minnesota St. Paul, Minnesota

February 1985

FOREWORD

This monograph is part of the Minnesota Economic Regulation Monograph series, a comprehensive survey of law pertaining to the production, processing and distribution of food and other farm comr modities in the United States. It outlines two types of regulations: (1) those designed to protect the health and safety of consumers and improve their knowledge about food purchasing; and (2) those that protect the farmer's product and input markets, particularly in terms of trade practices and bargaining power.

Dale c. Dahl Project Leader

CONTENTS

Preface.

Chapter 1. HISTORICAL BACKGROUND.

Development of American Food Laws in the Nineteenth Century

Evolution of the Major Federal Acts •

Federal Food and Drugs Act of 1906 • Packers and Stockyards Act • Fair Packaging and Labeling Act.

Notes to Chapter 1.

Chapter 2. CONSUMER-ORIENTED REGULATION •

Major Legislation •

Federal Food, Drug, and Cosmetic Act •

Structure of the Act. Relevant Definitions. General Provisions. Special Provisions.

Fair Packaging and Labeling Act.

Basic Provisions. Enforcement Authority •

Poison Prevention Packaging Act.

Inspection Acts •

Federal Meat Inspection Act.

Basic Provisions. Personal Exemption. Imported and Exported Meat. Federal and State Cooperation •

Poultry Products Inspection Act.

Basic Provisions. Exemptions. Federal and State Cooperation •

Egg Products Inspection Act.

Basic Provisions. Exemptions. Imports • State and Local Regulation.

Quality Control Legislation •

Federal Insecticide, Fungicide, and Rodenticide Act.

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1

1

1

2 3 3

4

7

7

7

7 7 7

10

11

12 13

13

14

14

14 15 15 15

16

16 17 17

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18 19 19 19

19

19

Classification of Pesticides. Cancellation or Suspension of Registration. Registration of Establishments. Penalties •

Filled Milk Act.

Filled Cheese and Adulterated Butter Acts.

Federal Import Milk Act.

Food Grading Acts.

Agricultural Marketing Act of 1946. U.S. Grain Standards Act. Export Standards. Food Inspection and Grading by the Department of Commerce •

u.s. Warehouse Act •

Inspection and Grading. Federal-State Relationship. Penalties •

Standards of Weight and Measure.

Comparison of Legal Standards: Packaging and Labeling.

Federal Food, Drug, and Cosmetics Act and the Fair Packaging and Labeling Act.

Basic Regulations • Nutrition Labeling.

Special Regulations Under the Fair Packaging and Labeling Act.

Federal Meat Inspection Act.

Poultry Products Labeling.

Notes to Chapter 2.

Chapter 3. PRODUCER-ORIENTED MARKET REGULATION.

Packers and Stockyards Act.

General Prohibitions • Regulation of Stockyards and Stockyard Dealers • Regulation of Poultry Dealers and Handlers • Records. Enforcement Authority.

Perishable Agricultural Commodities Act •

General Prohibitions • Licensing. Remedies •

Produce Agency Act.

Federal Seed Act.

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20 20 20 21

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22 23 25 25

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26 27 27

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28

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28 29

30

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31

32

57

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57 58 59 59 59

60

60 60 61

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Legislation Affecting Agricultural Producers' Associations.

Clayton Act. Capper-Volstead Act. Cooperative Marketing Act of 1926, Agricultural Fair Practices Act.

Agricultural Narketing Agreement Act.

Nilk Orders. Nonmilk Orders • Handler Regulation • Administration of the Order. Records. Enforcement.

Commodity Futures Trading Commission Act.

Contract Markets • Registration With the CFTC • Records. Registered Futures Associations. Investigatory Power. Antitrust Considerations •

Farmer-to-Consumer Direct Marketing Act •

Food Research and Promotion ,

Potato Research and Promotion. Beef Research and Promotion. Wheat Research and Promotion , Egg Research and Promotion • Tobacco Statistics

Transportation of Agricultural Products •

Forestry.

Notes to Chapter 3.

Chapter 4. COMPARISON OF REGULATORY SCHE¥iliS •

Notes to Chapter 4.

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62 62 62 63

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65 65 65 66 66 66

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67 67 68 61:1 69 69

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70 70 7l . 71 72

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74

89

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PREFACE

Few people would be surprised at the amount of money spent annually in our nation for domestic agricultural products. Rising food prices and increased consumer attention to the food industry have probably served to make most consumers aware of the magnitude of agricultural production rela­tive to our gross national product. Yet, many consumers may not be a~•are of how much of the agri­cultural dollar is attributable to marketing costs. Recent government statistics put that figure at nearly t1;m thirds of the total amount spent by American consumers annually for domestic foods.l/ This immense and increasingly complex marketing system is the subject of this monograph. -

Any attempt to cover this system entirely would be monumental. Therefore, the scope of this project will be more narrowly drawn. The focus here is on those legal constraints that regulate our domestic food marketing system. This limitation necessarily means that topics such as agricultural price and income maintenance policy, foreign markets and international trade, and the regulation of farm production will not be discussed directly, although each undeniably affects the domestic food marketing system. Limited attention, however, will be given to the regulation of food imports since this type of regulation has a more direct impact on the domestic market. The distinction between production and marketing aspects of agriculture is sometimes difficult, particularly regarding com­modities handled through a vertically integrated system.~/ Nonetheless, the distinction is necessary to place manageable bounds on the scope of this project.

The legal constraints that regulate agricultural markets (or any other segment of our economy) are basically of two types: (1) statutes enacted by state and federal legislative bodies, and (2) regulations adopted by administrative agencies for the purpose of implementing those statutes. As in other areas, the regulations are far more numerous than the statutes, Since this monograph can provide only a broad overview of the subject area, the statutes will receive primary attention, although the more important regulations will also be covered; the approach taken in considering sta­tutory regulation will be descriptive rather than analytical. The interpretation of statutes and regulations by judicial or administrative bodies is equally a part of the regulatory process, and some of the more far-reaching decisions from these sources 1iJill like\vise be covered.

Given the large number of statutes germane to this area, it is hard to develop an analytic fra­mework organizing them into a meaningful fashion. The scheme utilized here discusses the statutes according to whether they were primarily enacted for the benefit of agricultural producers or con­sumers.

These categories are not mutually exclusive, and some statutes could properly be classified in both. Uniform grain inspection legislation, for example, may ultimately serve the interests of pro­ducers as well as consumers, And, it is obvious that the Commodity Futures Trading Commission Act3/ benefits not only producers of agricultural commodities, but also others who trade or hedge in those commodities. These examples underscore the fact that the characterization of the law as a "seamless web" is especially appropriate when applied to food marketing reulation in our country.

Notes to Preface

1. U,S. Department of Agriculture, Fact Book~riculture 33 (Miscellaneous Pub. No. 1063, revised edition, 1976). Marketing costs include the expense of transporting, processing, and distributing food items. For the year 1974, the estimated cost of marketing domestic food pro-ducts was $92 billion. The total amount spent consumers on food was $1L;8 billion, leaving $56 billion as the gross return received by farmers. Id.

2. Sundquist, Removing Legal Constraints on Agriculture--Likely Impacts on Producers, Agribusiness Interests, and Consumers, 19 S.D,L, Rev. 512, 514, (1974).

3. Act of October 23, 1974, Pub.L.li!o. 93-463, 88 Stat. 1389, (codified) as amended in 7 u.s.c. § 1-22 (1976),

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HISTORICAl, BACKGROUND

Government regulation of agricultural products is not a recent phenomenon. Its origins can be traced back at least to early Greece and Rome, where wine inspectors guarded against adulteration. 1/ During the Middle Ages, brewers who adulterated their product were fined or severely punished. 'J:j The Magna Carta of 1215, perhaps more widely known for its revolutionary political ramifica­tions, also established standardized measures for wine, ale, corn, and other farm products. ll Laws of a similar nature were enacted in other European nations in later yearsof::../

Development of American Food Laws in the Nineteenth Century

In our country, the movement for regulating food market trade on a national level did not really reach fruition until the latter part of the nineteenth century. Regulation of this type of commercial activity had at that time two general objectives: (1) protection of the health and vJelfare (not unlike the la1<1S of ancient or medieval times) a_nd (2) promotion of fair trade prac­tices (a more recent objective, arising contemporaneously with more generalized trade regulation and antitrust laws). Since other trade problems were beginning to be addressed by federal legisla~ tion, it does not seem incongruous that concerned groups would turn to Congress as a source of possible remedial legislation for abuses in the agricultural sector of the economy.

Changes within the food industry :i.tself also provided an impetus for national legislative action. During this period a national system of food distrubution had begun to take shape. Many factors undoubtedly contributed to the emergence of this system, but three ln particular stand out. The development of refrigeration techniques enabled producers to market their goods across a much larger geographic areao Increased use of preservatives also expanded potential markets. Finally, the food industry itself was becoming more centralized. This nationwide food marketing system Jcequired federal legislation to correct

State attempts to deal with such problems were circumscribed early Supreme Court rulings on the proper relationship between state and federal regulatory authority. The Commerce Clause f:./ of the United States Constitution places the power to regulate interstate commerce in the hands of the federal government. As long as an item was in interstate commerce, action by the states was substantially limited. Jj According to the "original package doctrine," an item was deemed to be in interstate commerce until it was removed from its orig:tnal package and commingled with purely intrastate goods. 8/ Due to this rather broad interpretation m!' interstate commerce, Congress was lefi.: with a relatively broad area in which to

During this evolutionary period, it became apparent that the permissable state legislation, by itself, was an inadequate means of controL Political pressure by disgruntled farmers had prompte.d the creation of state agricultural departments to regulate sellers of imitation or adulterated farm products. There was, however, no uniformity among the statutes enacted by the various states, and some states had no regulatory program at all. Due to this lack of uniformity, the economic and technical growth of the food industry soon outpaced the ability of states acting independently to control it. It was from this historlcal background that the modern food regulatory laws emerged.

Many of the 19th century federal food laws concerned the regulatlon of imports and the collec­tion of duties and taxes. The Department of the Tr-easury, therefore, was given initial authority to administer many of these early programs. Its responsibilities included: enforcing the on importation of meat cattle (oxen or heifers) to prevent the introduction or spread of l.nfectious disease;Y/ collecting duties on liquors, provisions, spices and tobacco;lO/ applying the standard of proof spirits for alcohol to prevent frauds, and enfor~ing the specifications for the construction of distillery apparatus; ll/ regulating the manufacture of, and collecting a tax upon, oleomargarine;Jl./ and collecting a tax on "filled cheese. "J:}_/

The Department of the Interior shared this authority in certain areas. For example, \vhile the Treasury Department was required to c::>llect 1-ue tax on filled cl:Heese, the Department of the Interior •1as authorized to regulate its manufacture, sale, importation and exportation.l4-/ The

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departments also share4 authority under an 1897 act prohibiting the importation of impure or unwholesome tea.15/ This act authorized the Secretary of the Treasury to establish uniform stan­dards of purity,-quality, and fitness for consumption, and seize unfit tea. li/

Some early federal legislation was geographically limited. Congress passed two laws that applied only to the District of Columbia. One, intended to protect dairymen and prevent deceptive sales of butter substitutes, required that all oleomargarine be clearly labeled as such.17/ The other aimed at preventing the manufacture or sale of adulterated food or drugs in the District of Columbia.g/

While a number of similar federal laws were passed during the late 1800s, it was not until after the turn of the century that major federal regulatory programs began to take shape. They had their roots in the earlier statutes, but certain other historical forces also initiated and helped shape these major acts and so deserve special attention.l9/ Three such acts are discussed here.

The Federal Food and Drugs Act of 1906

The first major federal act to regulate food purity was the Federal Food and Drugs Act of 1906.20/ The passage of this act represented the culmination of a struggle begun years earlier by various interest groups. Two bills to protect the public against adulterated food had been intro­duced in Congress as early as 1879.21/ In all, 103 bills of a similar nature were proposed prior to the enactment of the 1906 statute.227

One of the groups that had lobbied strongly for this sort of legislation was farmers. They were concerned with the sale of adulterated or imitation food (primarily dairy) products. Their political pressure had earlier brought about the creation of state agriculture departments, and the employment of state chemists to investigate these food items. In fact, by the time the federal act was passed in 1906 most of the states already had laws regulating food purity.~/ Since the states could not regulate interstate commerce in these adulterated foods, there was considerable impetus for a federal law.

Aside from pressure from farmers, much of the credit for the passage of the 1906 Act can be given to one government scientist, Dr. Harvey w. Wiley, who was chief chemist in the United States Department of Agriculture (USDA) at the time of the enactment. He went so far as to organize a "poison squad," composed of departmental employees, which tested the health effects of food preser­vatives.24/ The resulting demonstration of deleterious consequences received worldwide attention from the-press. When the 1906 Act was passed, Dr. Wiley's Bureau of Chemistry was given the power to enforce it.25/ Another determining factor in the fight for this type of legislation was the sup­port given to food and drug purity through legislation.

The original Act prohibited the manufacture, sale or distribution of food items containing poisonous or deleterious ingredients. The object was to prevent the use of interstate commerce in conveying and placing before the consumer misbranded or adulterated food. ~/

The 1906 Act was not without shortcomings. For example, foods were considered to be adulterated if poisonous ingredients were added, but not if they contained poisons that were naturally present. Although "misbranding" prohibited deliberate misstatements of weight or measure on a food item package, no provision was made for assuring that all food packages were marked in a conspicuous, as well as truthful, manner. In an attempt to rectify these and other shortcomings, the Act was amended six times prior to being repealed and replaced by the Federal Food, Drug and Cosmetic Act of 1938.!L/

The original act was first amended just six years after its passage. The "Sherley Amendment"28/ expanded the prohibition against misbranded drugs. Six years later Congress enacted the so-called Net Weight Amendment 29/ which required that the weight, measure, or numerical count of food items be clearly marked on the package. The Kenyon Amendment 30/ was designed to bring wrapped meats, not previously considered package foods, within the purview of the Food and Drugs Act.

2

Congress amended the Act for the fourth time to establish a definition and standard for butter.ll/ This was followed by the McNary-Mapes Amendment ~/ which gave the Secretary of Agriculture authority to establish quality standards for canned food. Interestingly, this amendment had been sponsored by reputable members of the canned food industry.]l/

The last of the six major amendments was the Sea Food amendment.34/ It too was sponsored by some of the members of the industry it was designed to regulate. The amendment gave the Secretary of Agriculture the power to inspect the production, packaging and labeling of sea food and authorized packagers of sea food to indicate their compliance with the regulations on the label of their products.

These amendments alleviated some of the problems with the 1906 Act, but officials charged with administering the Act became disenchanted with the process of attempting to cure its ills by con­tinual amendments.35/ Changes of the most basic kind had become necessary. The use of preser­vatives, bleaches,~oloring matter, and other food additives had increased to a point requiring entirelynew definitions of "adulteration" and "misbranding."36/ Furthermore, the 1906 Act had made no provisions for the regulation of cosmetics, which had subsequently come into widespread use.37/ There was, therefore, considerable support for a new act, which Congress finally passed in 1938.38/

The Packers and Stockyards Act

The Packers and Stockyards Act of 1921 39/ was passed in response to the monopoly existing in the meat-packing industry during the early part of this century. At that time five major packers--Armour, Swift, Wilson, Cudahy, and Morris--controlled the market in meat and meat products.40/ The "Big Five," as they came to be called, also had begun to dominate the market for meat substitutes like cheese and eggs. Perhaps the most alarming economic factor was the fact that the Big Five owned many of the stockyards and controlled the distribution of most of the perishable meat.41/ This gave them control of not only the processing and packaging of meat, but also of supply-and distribution as well.

Among the more outspoken critics of this situation were livestock producers and associations. They became increasingly critical of the way in which stock was sold in the market.42/ President Wilson responded in 1917, directing the newly created Federal Trade Commission (FTC~43/ to investi­gate possible abuses in the meat-packing industry. The Commission determined that abuses did indeed exist, and issued a report on the situation the following year.44/

The impact of the Commission's report was twofold. First, the Justice Department brought an antitrust lawsuit against the Big Five. The defendants ultimately agreed by way of a consent decree to divest themselves of their interests in stockyards, warehouses, and railroad terminals.~/

The second major effect of the report was to stimulate controversy concerning the best legisla­tive method of dealing with problems in the meat industry. One proposal was to allow the FTC to regulate stockyards. Another proposal called for the.creation of a separate commission to regulate the entire industry. A third proposal suggested the Department of Agriculture as the regulatory agency. This last proposal was adopted as the Packers and Stockyards Act.

The Act gave the Secretary of Agriculture complete inquisitorial, visitatorial, supervisory, and regulatory power over packers and stockyards, and their activities.46/ A House Report indicated that Congress designed the Act to protect the interests of the public as-well as the interests of "all of the elements of the industry from the producer to the consumer without destroying any unit of it."47/

In very broad terms, the Packers and Stockyards Act regulates three areas of commerce: 48/ (1) the marketing of livestock at stockyards,49/ (2) the marketing of live poultry at poultry markets,50/ and (3) the business activities of-;eat packers. One of the Congressmen responsible for the passage of the Act characterized it as "a most comprehensive measure [that] extends further than any previous law in the regulation of private business, in time of peace, except possibly the interstate commerce act. ".2.!/

The Fair Packaging and Labeling Act

The Fair Packaging and Labeling Act of 1966 52/ appeared in response to certain developments in the marketing and labeling of consumer products.53/ Prior to the Act there existed a variety of

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package weights and measures for food items, all of which made value comparisons difficult for most consumers. At the same time, many food processors and manufacturers were utilizing nonuniform quan­tity designations (e.g., "giant size"),54/ The Act attempted to insure that the labels of packaged products, including food, adequately inform consumers of the quantity and composition of their con­tents and promoted packaging practices that facilitate price comparisons by consumers.55/

Regulatory authority under the Act is shared by the Food and Drug Administration (FDA) and the FTC. The Fl.lA has jurisdiction over food, drugs, and cosmetics, while the FTC is responsible for all other consumer products. A third agency, the Department of Commerce, is given the power to correct an "undue proliferation" of weights or quantities which a particular product is marketed.

The principal reason for this legislation is to establish uniformity and so preclude the necessity of case-by-case prosecution.56/ In order to achieve this end, both the FTC and the Secretary of Health, Education, and Hellare (HElfJ) are responsible for promulgating regulations governing label format and placement, quantity designations and quality statements" Both agencies may also issue regulations applying only to particular commodities or products.~/ Any food label or package that violates any of these regulations is deemed to be "misbranded"' under the Federal Food, Drug and Cosmetic Act,5'6/ and is subject to injunction or

Notes to Chapter 1

1. Kleinfield, Legislative.~t£!.L of the Federal l<~ood, Drug, and Cosmetic Act, 532 n.l (1946).

2.

3, ld,

5. M. Nadel, The Policies of Consumer Protection, 9 (1971).

6. U.S. Canst., art. VII, sec. !:1, cL 3.

7. Rhodes v. low'!, 170 U.S. Lfl2 (1&98) •

. 8. Leisy~~' 135 U.S. 100 (1890).

9. Revised Statutes of 1<3':15, title 33, 2493, 18 Stat. 460, 461 (vol. 1).

10. Id. at 2504.

lL Revised Statutes of 1!:195, title 35, ch. 4, 3249, 3269, Hl Stat. 62S, 630, 635.

12, Act of August 2, 11:186, ch. SO, 24 Stat. 209.

l3, Act of June 6, Hl%, ch. 337, 29 Stat, 253.

14. Id.

15. of J.Iarch 2, ll:\97, ch. 35!.l, 29 Stat. 604,

17. Act of January 25, 1879, ch. 22, 20 Stat. 2M.

1!:1. Act of October 12, 1!:188, ch. 1090, 25 Stat. 549.

19. This analysis does not attempt to provide a comprehensive legislative history of these acts; nor are all of the major federal acts covered. Rather, the intent is to point out some of the important forces that helped shape the federal legislation in this regulatory area and their effects in terms of the statutory provisions ultimately enacted.

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20. Act of June 30, 1906, 34 Stat. 76~ (repealed 193~).

21. See H. R. 5916, 45th Cong., 3d, Sess., 8 Cong. Rec. 575 (1879); H. R. 2014, 46th Cong., 1st Sess., 9 Cong. Rec. 1552 (1~79).

22. Dunn, Federal Food and Drugs Act of 1906: Its Legislative Historx, 1 Food Drug Cosm. L. J. 297 (1946).

23. Regier, 1'he Struggle for Federal liood and Vrugs Le~islation, 1 Law & Contemp. Probs., 3 (1933).

24. Id.

25. Dunn, The Federal Food and Dru&s Act of 1906: Its Le&islative Historx, 1 Food Drug Cosm. L. J. 297, 304 (1946).

26. McDermott v. Wisconsin, 228 U.S. 11~ (1913).

27. The 190!> Act was repealed by the Act of June 25, 1938, ch. 675, §lt902(a) 52 Stat. 1059, with the exception of §lf10(a) of the original act, which now appears as 21 U.S.C. §lf372(a) (1976), and covers seafood inspection.

28. Act of August 23, 1912, 37 Stat. 416.

29. Act of March 3, 1913, 37 Stat. 732.

30. Act of July 24, 1919, 41 Stat. 234.

31. Act of March 4, 1923, 42 Stat. 1500.

32. Act of July 8, 1930, 46 Stat. 1019.

33. Hearings of H.R. 16031 Before the Committee on Agriculture, 70th Cong., 2nd Sess., 88 (1930).

34. Act of June 24, 1934, 48 Stat. 1204, as amended bx Act of August 27, 1935, 49 Stat. 871.

35. The Chief of the Food and Drug Administration testified to a Senate committee in 1934 that attempting to keep the 1906 Act afloat by the amendment process constituted an "utterly impossible task." Hearings on S. 2800 Before The Senate Committee on Commerce, 73d Cong., 2d Sess., 568 (1934).

36. H. Toulmin, 1 Treatise on the Law of Food, Drugs and Cosmetics 16-17 (2d ed., 1963).

37 • .!2_. at 17.

38. The Federal Food, Drug, and Cosmetic Act; of 1':138, 52 Stat. 1040, (codified as amended, 21 u.s.c. H301-392 (1976)).

39. Act of August 15, 1921, 42 Stat. 159, (codified as amended, 7 u.s.c. §§lfl81-229 (1976).

40. ~Flavin, The Packers and Stockyards Act, 1921, 26 Geo. Wash. L. Rev. 161, 161-163 (1958) for a more extensive description of the economic conditions existing prior to the passage of the Act.

41. Id.

42. ~ 61 Cong. Rec. 2616 (1921) (statement of Sen. Kendrick).

43. The FTC was created in 1914 by the Federal Trade Commission Act of 1914, 38 Stat. 717, (codified as amended by 15 u.s.c. §§ lt41-58 (1976)). The Act authorized the F.T.C. to admi­nister and enforce several statutes designed to preserve and promote free and fair economic competition.

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44. islation Before the House Committee on Agriculture, 66th Cong., Summary of the Federal Trade Commission's report on the meat-

45. Flavin, The Packers and Stockyards Act, 1921, 26 Geo. Wash. L. Rev. 161,162 (1958).

46. H. R. Rep. No. 77, 67th Cong., lst.Sess., 2 (1921).

47. Id.

48. Barrett, The Legal Aspects of Major Programs Administered by the United States Department of Agriculture, 14 Wyo. L. Rev. 175, 179 (1960).

49. The Supreme Court has noted that the Act gave the Secretary of Agriculture "substantially the same jurisdiction over stockyard matters which the Interstate Commerce Commission has over railroads ••• " Tagg Bros. v. United States, 280 u.s. 420, 435, .3 (1930).

50. An amendment regulating the handling of live poultry in commerce was added in 1935. Act of August 14, 1935, 49 Stat. 648.

51. H.R. EP.NO. 77, 67th Cong., 1st Sess., 2 (1921).

52. Act of Nov. 3, 1966, 80 Stat. 1296 (codified as amended, 15 u.s.c. §§#1451-61 (1976)).

53. Sen. Rep. No. 1186, 89th Cong., 2d Sess., 1 (1966).

54. Id. at 3.

55. Id. at 1.

56. Id. at 2-4.

57. These include standards for qualitative size designations (such as "small," "medium," or "large"), standards for size designations by "serving," representation of savings on retail price, and ingredient labeling. 15 u.s.c. §#1454 (1976).

58. Act of June 25, 1938, 52 Stat. 1040, (codified as amended, 21 u.s.c. §§#301-392 (1976).

59. 21 u.s.c. §§#332, 334 (1976).

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Chapter 2

CONSUMER-ORIENTED REGULATION

Major Legislation

Federal Food, Drug, and Cosmetic Act

Structure of the Act

The Federal Food, Drug, and Cosmetic Act i/ is composed of nine chapters. The first chapter 3J simply states the short title by which the Act-is to be cited. Chapter II 3/ contains the defini­tions for the most important terms used in the Act, including "food" !f./ and-" raw agricultural commodity. "2./

The third chapter 6/ outlines prohibited acts and prescribes penalties for violations. It also provides for injunction-proceedings 7/ or seizure 8/ of nonconforming foods 11 as possible remedies for certain violations. - -

Chapter IV 10/ deals specifically with food, while Chapter V 11/ covers drugs, and Chapter VI 12/ addresses cosmetics. One provision of Chapter VI authorizes the Secretary of HEW to promulgate regulations defining and establishing quality standards for any type of food.l3/

The seventh chapter 14/ contains the general administrative provisions of the Act. Included among these are statutes governing hearings,lS/ examinations,l6/ and investigations.lZ/

Provisions relating to imported and exported food items are found in Chapter VIII.l8/ Chapter IX 19/ consists of miscellaneous provisions, including a separability clause 20/ and a provision 21/ repealing almost all of the Federal Food and Drug Act of 1906.22/ -- --

Relevant Definitions

For animals. cultural that are

purposes of this Act, "food"23/ means (1) articles used as food or drink for man or other (2) chewing gum, and (3) articles used for components of any such article. A "raw agri­

commodity" J:j_/ is defined as any food in its raw or natural state, including all fruits washed, colored, or otherwise treated in their unpeeled natural form prior to marketing.

General Provisions

Probably the most important provision of the Federal Food, Drug, and Cosmetic Act is the one prohibiting the adulteration or misbranding of any food in interstate commerce.25/ This general prohibition covers the introduction, or the delivery for introduction,26/ as well as the receipt 27/ of any adulterated or misbranded food in interstate commerce. The Act"""'S'imilarly forbids the manu::­facture of adulterated or misbranded foods~Z8/ Potential violations of these prohibitions may be restrained through injunction proceedings,297 and the food is subject to seizure and condemnation.30/ Penalties for violating the Act include fines and imprisonment.]!/

Prohibition of Adulteration. A food may become adulterated because of what it contains, because of what has 'been added to it, or because of what has been omitted or abstracted from it.32/ Most commonly a food is adulterated when it contains a deleterious substance rendering it injurious to human health.33/ If the substance is naturally present in the food, there is no adulteration if the quantity does-not ordinarily render it injurious to health.34/ Of course, the addition of poisonous or deleterious substances ~/ to food is prohibited.367

Tolerances. In the course of manufacturing or processing certain food products it sometimes becomes necessary to add substances which in large quantities are poisonous or deleterious. Where such substances are unavoidable the Secretary of HEW (hereinafter referred to as the Secretary) may issue regulations limiting their quantity.37/ In establishing these limits the Secretary is directed to take into account the extent to-which the use of the substance is necessary in the pro­duction of the food product 38/ as well as the other ways in which the same or other deleterious substances may affect the consumer.39/

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Any food product containing quantities in excess of the applicable limit is adulterated.~/ Substances so regulated include food additives ~/ and pesticides.~/

The Act distinguishes between poisonous or deleterious substances added to the food and those which occur naturally. "Added" substances include anything not an inherent or intrinsic part of a food. There need not be a finding that the substance was intentionally added; only that under nor­mal conditions it is not a component of the food. The standard for proving adulteration is higher in the case of a substances occurring naturally in the food.43/ Such substances must be found to be "ordinarily injurious to health. "44/ -

Tolerance levels are also prescribed by the Secretary for pesticides used on raw agricultural commodities.~/ Therefore, a raw agricultural commodity is not ~dulterated if pesticide levels are lower than the tolerance level, or if the pesticide has been exempted entirely from the requirement of a tolerance level.46/

In promulgating tolerance regulations for pesticide chemicals, the Secretary must take into account, among other factors, (1) the need to produce an adequate, wholesome, and economical food supply, (2) other ways in which the consumer may be affected by the pesticide chemical, and (3) the opinion of the Secretary of Agriculture as to the usefulness of the pesticide in food production.47/ The tolerance level may be set at zero where justified by scientific data,48/ effectively banning-­use.

Any person who has registered a pesticide (or obtained an experimental permit) under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) 49/ may file a petition with the Secretary proposing the issuance of a regulation establishing a tolerance for the pesticide chemi­cal, or requesting the chemical's exemption from the Food Act.SO/

Alternatively, the Secretary may, upon his own initiative or upon the request of any interested person, promulgate a tolerance regulation for a pesticide chemical.l!/ Any regulation promulgated may subsequently be amended or repealed.S2/

The Secretary must also publish tolerance regulations for food additives.53/ A food additive is defined as any substance, the intended use of which results or may reasonably be expected to result, directly or indirectly, in its becoming a component of or otherwise affecting the charac­teristics of any food.54/ There is some potential overlap between this category and poisonous or deleterious substances;-that is, a poisonous or deleterious substance may have been added to a food product, and therefore could also be considered to be a food additive. The distinction that has evolved, however, is that poisonous or deleterious substances are generally those that are una­voidably added to the product but cannot qualify for approval as food additives. Furthermore, when a substance satisfies the standard of safety for food additives, it is automatically exempt from the standards for poisonous or deleterious substances.SS/

Regulations for food additives also are initiated by a petition filed with the Secretary pro­posing the issuance of a regulation,S6/ or by the Secretary's own initiative.1I/ They may be amended or repealed.58/

In addition to the formal tolerance levels discussed above, the FDA may also issue what are known as "action levels."59/ These temporary levels, which are generally issued without a lengthy hearing process, are utilized when the need for controlling a particular substance is immediate and short-range. They generally apply only "until the appearance of more stable circumstances makes a formal tolerance appropriate."60/ As is the case with formal tolerance levels, the overriding con­sideration is whether the subst;nce is injurious to health.

Food is considered adulterated if it consists in whole or in part of any filthy, putrid, or decomposed substance 61/ or is prepared, packed or held under unsanitary conditions whereby it may become contaminated with filth, or rendered injurious to health.62/ A separate provision prohibits filthy, putrid, or decomposed substances in butter, margarine, or-oleomargarine.~/

Food that is processed wholly or partially from a diseased animal, or from an animal that has died by a means other than slaughter, is adulterated.64/ The statute also condemns food packed in a container composed of any poisonous or deleterious substance which is potentially injurious to health.65/

8

The prohibition against adulteration covers not only the addition of dangerous substances, but also the omission of substances from food. The Act considers food adulterated if: (1) any valuable constituent has been wholly or partially abstracted from it; (2) any substance has been substituted for a valuable constituent; or (3) damage or inferiority has been concealed in weight, or to reduce its quality or strength, making it appear to be of better or of greater value.66/

Prohibition of Misbranding. Misbranding of a food product occurs when its label is false or misleading.67/ This includes cases where the label does not comply with the statute 67/ governing the listing-Qf vitamins and minerals on the labels of food products.68/ No food may be offered for sale under the name of another food.69/ If the food is an imitation-of another product, the word "imitation" must be clearly visible on the label. 71/ If any word, statement, or information required by the Act to appear on the label is not-placed prominently and conspicuously thereon, the food is misbranded.~/

The misbranding provision requires any packaged food item to bear a label containing the name and place of business of the manufacturer, packager, or distributor, and an accurate statement of the quantity of the contents in terms of weight, measure, or count.73/ Any food container that is misleading as to its contents is mislabeled.74/ --

As a general rule, the use of any artificial flavoring, artificial coloring, or chemical pre­servative in a food product must be indicated on the label.75/ However, these labeling requirements do not apply to butter, cheese, or ice cream.76/ Separate provisions govern the listing of pesti­cide chemicals used in or on a raw agricultural commodity.77/ The Secretary may allow exemption from these requirements where compliance is impracticable.78/

A shipping container bearing any commodity 79/ to which a pesticide chemical has been applied after harvest is mislabeled unless it bears a label declaring the chemical's presence and function.80/ This declaration is not required for commodities that have been removed from their shipping containers and displayed for retail sale.Sl/

The labeling and packaging of margarine or oleomargarine 82/ also comes under the Act, regardless of whether it is actually sold in interstate commerce.S3/ All margarine and oleomargarine must be packaged,B4/ and sold in units of one pound-;r less.85/ The word "margarine" or "oleomargarine" must appear prominently on the package, and a full and ~curate statement of all of the ingredients must appear on the label.B6/ These special requirements are in addition to, and not in lieu of, the other requirements of th;-Act.87/

Food Standards. The prohibition of mislabeling relates to standards of food identity and quality. The Act authorizes the Secretary to promulgate regulations establishing a reasonable defi­nition and standard of identity, a reasonable standard of quality, and/or reasonable standards of container fill for any food.88/ These standards are meant to promote honesty and fair dealing in the interests of consumers.89/ The Act prevents the Secretary from promulgating quality standards for butter or for any fresh-or dried fruits or vegetables, citrus fruits, avocados, cantaloupes and melons.90/

A standard of food identity describes a food product in terms of size and shape, basic ingre­dients, optional ingredients, curing period, percentage of moisture, and required percentage of total solids.91/ A food may fail to conform to a standard of identity in three ways: (1) if it contains an ingredient not found in the identity standard; (2) if it fails to contain any ingredient required by the standard; and (3) if it does not contain the required quantity for an ingredient.92/ The Act prohibits marketing in interstate commerce of any food which fails to meet the applicable-­identity standard.2l/

From the beginning, food identity standards have been of the "recipe" type,94/ listing both optional and mandatory ingredients. The product must contain ingredients listed as mandatory by the FDA. Only the ingredients chosen by the manufacturer from the optional list must be indicated on the label. Any food for which the FDA has established a standard of identity, and which does not conform with that standard, is misbranded within the meaning of the Act.95/

Food quality standards establish minimum levels for characteristics such as color, size, ten­derness, and absence of bruises or marks. Quality standards are common for canned goods since they can be readily evaluated in terms of these characteristics.

9

The regulations for canned peaches 96/ are fairly typical. The rules establish seven stan­dards, one of which tests tenderness according to the weight required to cause a metal rod to pierce a sample of the f~uit. Other standards cover weight, allowable variance in weight between the largest and smallest pieces in the container, amount of peel remaining on peeled peaches, acceptable amount of blemish, retention of natural shape, lack of trimming, and acceptable amounts of crushed or broken pieces.2l/

When peaches (or any other items) are determined to be below the prescribed standard of quality but are nonetheless wholesome, they must be labeled "below standard in quality." They must also be labeled with an appropriate phrase for the particular defect; for example, "not tender" or "not well peeled." The law does not prohibit the sale of substandard but wholesome food; producers comm~nly sell such food to institutions at discounted prices.

Food quality standards are not entirely distinct from food identity standards, but there are differences. In the case of corn, for example, the identity standard is basically descriptive, using terms such as "clean, sound kernels" and "succulent sweet corn. "2.!i/ The applicable quality standard uses a more objective approach; it specifies the maximum number of discolored kernels, pieces of husk, and amount of silk allowed.99/ It has been suggested that the purpose of the quality standard is sometimes to explain the-non-objective language of the standard of identity.lOO/

Quality standards have been promulgated for a few foods for which there are no identity stan­dards.lOl/ If a product fails to measure up to the quality standard, the label must indicate the fact, along with the reason for the quality deviation.l02/

In addition to complying with identity standards and quality standards, food packages may not be misleading as to their contents. If the food's container is made, formed, or filled in a misleading manner, the article will be considered misbranded.lQl/. One way to remedy this problem is by repackaging. Or, if a container standard fill is in effect for the particular food product, the product may avoid being found misbranded if its label indicates that it does not comply with the applicable standard.l04/

Container fill standards must give due consideration to the natural shrinkage of fresh food in storage or transit.lOS/ Another consideration is the need for various kinds of packing and protec­tive material.l06/ ~ttling of products after packaging, water absorption, reduced liquid content as a result of vacuum packaging, and the common practice of using assorted package sizes may all complicate the effective maintenance of standards for a particular product.

If a product is packed in liquid, the standard is usually determined by comparing the weight of the food after a prescribed draining time to the total weight of the package.l07/ Then the total weight capacity of the container is determined by filling it with water to within 3/16 of an inch from the top.~/ The regulations usually express standards of fill in terms of the weight of the drained product as a percentage of the container's total weight capacity.

Special Provisions

The Seafood Inspection Ac.t. The enactment of the Federal Food, Drug, and Cosmetic Act in 1938 repealed the 1906 Food and Drug Act and most of its amendments.l09/ The amendment governing the inspection of seafood,llO/ however, continues in force today. ~now appears as part of the Federal Food, Drug, and Cosmet~Act,lll/ and is commonly known as the Seafood Inspection Act.

The Act in its present form authorizes the Secretary of HEW to examine and inspect seafood and its production, packing and labeling. This inspection occurs upon the application of any seafood packer accompanied by the payment of a fee.ll2/ If the seafood passes the inspection, this fact may be indicated on the food by means of a mark:-Btamp, label, or other device. Sanctions for counter­feiting these means of identification include fines and imprisonment.ll3/

The Delaney Clause. One of the most important changes in the Federal Food, Drug, and Cosmetic Act occurred in 195~ with the passage of the Food Additives Amendment.ll4/ This amendment deals generally with the process of FDA approval of food additives,llS/ but it also contains a proviso prohibiting the approval of any food additive causing cancer in humans or animals.ll6/ This proviso is commonly known as the Delaney Clause. ---

Generally a food additive may not be used until the FDA has issued regulation governing the permissible terms of its use.ll7 I Any person (including the Secretary of HEW) may propose the

10

issuance_of a regulation proscribing the conditions for the additives used.118/ In most cases, the manufacturer of a food additive will file the petition.119/

The Delaney Clause 120/ is much more restrictive than the general safety provision 121/ appli­cable to all other food additives. The statute flatly prohibits the use of any food additive found to "induce" cancer, thus forbidding regulations authorizing the additive's use at any tolerance level. By its terms, the Clause applies to (1) any additive which induces cancer when ingested by man or animal, and to (2) any additive which, after tests which are appropriate for the evaluation of the safety of food additives, is found to induce cancer in man or animal.122/

Once a substance is determined to be carcinogenic, the FDA may not engage in a risk-benefit analysis to determine whether to allow its use.123/

It is interesting to note, however, that Congress recently intervened on behalf of one commonly used food additive now linked with cancer, saccharin. On April 15, 1977, the FDA proposed to ban the use of saccharin in foods or as a tabletop sweetener.124/ By its action, the FDA withdrew its prior approval of saccharin as a permissible food additiv~- The public reaction to this proposed ban on the artificial sweetener was decidedly negative. Congress responded by passing the Saccharin Study and Labelling Act 125/ which suspended any action on the sweetener for 18 months, and mandated a scientific reassessment of the problem. Some commentators have suggested that the policy reeva­luation required by the Act may lead to the evolution of a more rational and scientific approa'ch to regulating the processing of food.l26/

Animal Feed Additives. The Animal Drug Amendment 127/ was added to the Federal Food, Drug and Cosmetic Act in 1968. It is similar to the Food Additives Amendment in that it contains both a general safety clause 128/ and an anticancer clause.129/ However, the anticancer clause of the Animal Drug Amendment allows the FDA to permit the use of carcinogenic animal drugs if no residue of the drug remains in the edible portions of a treated animal after slaughter, or in any food yielded or derived from the living animals.130/ The drug must not adversely affect animals ingesting it.131/ The anticancer clause is c~only referred to as the DES Amendment because it was origi­nally enacted to allow continued use of diethylstilbestrol (DES), a synthetic estrogen which promo­tes growth in certain animals.

Chemicals such as DES should be distinguished from substances found in animal feed which have a "secondary" carcinogenic effect. An example is selenium, an essential nutrient for many animals raised for slaughter. Selenium has been found to cause a pathological change in laboratory animals which in turn induces the formation of tumors; it has not been found to induce cancer directly.132/ Laboratory rats fed large amounts of selenium developed liver damage leading to tumors. The FD~ therefore decided to regulate selenium under the general safety clause rather than the anticancer clause.133/ The regulations permit selenium's use as an animal nutrient so long as it does not exceed prescribed safety levels. Thus, chemicals whose carcinogenic effect is only secondary con­stitute a second exception to blanket prohibition of cancer-causing substances.

Fair Packaging and Labeling Act

As its name implies, the Fair Packaging and Labeling Act 134/ regulates some of the same areas as the Federal Food, Drug, and Cosmetic Act 135/ enacted some ~years before. In the intervening years, some of the earlier Act's shortcomings had become apparent. It had proved effective in dealing with the more blatant forms of packaging deception, e.g., false bottoms, incorrect weights, and false ingredient listings, but could not possibly reach all of the more subtle forms of decep­tion.136/ In addition, the Act's case-by-case method of adjudication hindered its effectiveness.i37/

The retail marketplace for food had itself changed dramatically over the years. In 1966, when the Fair Packaging and Labeling Act was enacted, there were over 8,000 promotionally designed items in a typical grocery store, compared with 1,500 items only 20 years previously~138/ The food package or label had begun to take on some of the informational functions formerly performed by the grocery store clerk. These informational functions were often at odds with the package's role as an enthusiastic advertisement and promotional device.139/

During the 1960s product proliferation increased to the point where 20 new or improved products were entering the market every working day.140/ For many of the food products, new and old alike, a variety of package sizes and shapes was available. For example, the Senate Report issued with the

11

Fair Packaging and Labeling Act pointed out that at that time manufacturers '#ere marketing potato chips in 71 different quantities.l4l/

It \vas vJith these problems in mind that Congress enacted the Fair Packaging and Labeling Act. It sought not only to protect the consumer from deliberate frauds and deceits, but also to affir­matively require that relevant information appear on the package in a meaningful and uniform manner.l42/ The Act states that its purpose is to ensure that packages and labels enable consumers to obtaJL~~accurate information as to the quantity of the contents.l43/ This facilitates comparisons among similar productsol44/ In making these comparisons, the cons~er performs the important market function of rewarding ~efficient producer.~/ -

Basic Provisions

The Act's major provision makes it unlavJful for any person 146/ to distribute any consumer com-modity if its or labeling does not with the Act.J!:l./ Any consumer commodity that is introduced into commerce in violation of the Act or its regulattons is misbranded within the meaning of Chapt.er III 148/ of the Federal Food, Drug, and Cosmetic Act.l49/ This prohibition does not apply to wholesale Mretail distrlbutors of consumer commodities unless they are engage·d in the packaging and labeling of those commodit:i.es or by any means specify the manner in whieh the com~ modities are packaged or labeledol~~/

The term ""consumer encompasses any food, drug, device, or cosmetic (as those terms are defined in the Federal Food, Drug, and Cosmetic Act),l5l/ or any other commodity which is custo­marily produced or distributed for human consumption.l52/ r"rom this broad definition, the Act excludes certain products for which specific labeling and requirements have already been imposed.l53/ Among the items excluded from cove :rage are meat or meat products, m: poultry products, and tobacco or tobacco products; any subject to the packaging or labeling requirements imposed by the Secretary of Agriculture pursuant to the Federal Insecticide, Fungicide, ana Rodenticide Act or pursuant to the Virus-Serum Toxin Act; 156/ any beverage sub~ ject to the and requirements imposed under the Federal Alcohol Administration Act;l57/ and any commodity subject: to the provisions of the Federal Seed Act.~/

The basic: provisions of the Aet stipulate the requirements for or commodities. The Act regulates those containers or wrappings in ~Yhich any is enclosed for use in the delivery or display of that produet to retail The statute does not govern bulk shipping containers used to transport the commodity to manufac"".:(urers, pro­cessors, packers, or distributors.l60/

A consumer commodity must bear a label 161/ of the manufacturer, packer" o:r distributor.}!~/ state the 'Weight, measure, or numerical count of servings, it must also indicate the net quantity

and the place of business display panel 163/ of the label must

the contents.l64/ -If a label specifies a number of of each servi;g:~;

Any package containing less than four pounds must state the net quantity of the contents listed tn both ounces and pounds remainder over one pound iffil!St be listed in ounces, o:r common or decimal fractions of the A package containing less than one gallon must indicate its con-tents in terms of the largest vJhole uni.t , quarts and pints, or pints, as app:ropriate), with any remainder in terms of fluid ounces, or common or decimal fractions o£ the p:i.nt or qlj\art.l67/ Linear measure is to be expressed in inches and the largest whole unit (yards, yards and feet, ~fe.et).li?!/ Inches 0!" fractio~1s of the foot or yard sere used for indicating any remairtder.169 / Similarly, area ls to be expressed in square :i.nches and the la:rges t whole square unit yards, square and square feet, or square fe>St) Rema:i.nd.e:rs for a:rea measure must be expressed :l.n square inches, or fractions of the squm~e foot or yalcd.l7lj

There is a separate provision governing the listing of 'wYeight on what fs known as "'random package'" -~ one of a lot of packages of the same consumer commodity 'ivith varying lrJeights.l72/ On a random package, the w'eight may be in pounds carried out to not more than t>N'O de~al ces.l73/

Any food item '\>lith these net quantity requirements may also utilize a supplemental statement elsewhere on the package,l74/ This statement may describe the net quantity of the con­tents in nondeceptive terms, provided that the statement does not use terms that tend to exaggerate the amount of the eontained i.n the package.l75/

12

The Act also attempts to facilitate cooperation with state authorities in regulating the packaging and labeling of food. A copy of any regulation promulgated under the authority of the Act must be transmitted to the Secretary of Commerce,l76/ who in turn distributes a copy of the regula­tion to all appropriate state officers and agenci~ The Secretary of Commerce is also directed by the statute to furnish state officers and agencies with information and assistance in order to pro­mote uniformity in state and federal regulation of the labeling of consumer commodities.l77/

The Act does, however, supersede all state laws regulating the labeling of any consumer com­modity covered by the Act if that law is less stringent or requires information different from that required under the Act.l7S/ State labeling statutes and regulations which are more stringent than federal standards are v~d.l79/ One court has, in fact, interpreted the Act as superseding only state "net contents" regulati0Us.l80/ According to this interpretation, Congress did not intend to pre-empt other areas of state regulation of the packaging and labeling of food.!~/

There is a savings provision 182/ in the Act which expressly states that it does not operate to repeal the Federal Trade Commission Act,l83/ the Federal Food, Drug and Cosmetic Act,l84/ or the Federal Hazardous Substances Labeling Act:f85/ Therefore, the labeling and packaging-r;quirements, exemptions, and tolerances of these other ~s remain in effect. For example, in a recent Supreme Court case 186/ a manufacturer relied on a provision 187/ of the Federal Food, Drug, and Cosmetic Act which allows for reasonable variations from the ~weight stated on the label of a food pro­duct due to the loss or gain of moisture during the course of good manufacturing or distributing practices. Nothing in the Fair Packaging and Labeling Act explicitly permits such variations. Nonetheless, because of the savings clause the allowances established by the Federal Food, Drug, and Cosmetic Act remain in effect. The manufacturer, therefore, was not subject to any enforcement action for the reasonable weight variations.

Enforcement Authority

The responsibility for enforcing the Act lies primarily with two authorities.~/ The Secretary of Health and Human Services has the authority to regulate any consumer commodity which is a food, drug, device, or cosmetic, as those terms are defined in the Federal Food, Drug, and Cosmetic Act. The FTC regulates every other consumer commodity. Either may promulgate regulations exempting particular commodities from full compliance with the requirements that would otherwise apply under the Act.

The Secretary of Commerce also plays a role in the administration of the Act. If he determines that there is an undue proliferation of the weights, measures, or quantities in which any consumer commodity is being distributed for sale at retail, he can request manufacturers, packers, and distributors to participate in the development of voluntary product standards for that commodity.l89/ These standards are necessary when the undue proliferation of any product impairs the reasonable-;bility of consumers to make value comparisons between alternative brands.l90/

A separate statute sets forth procedures for the adoption of voluntary product standards.l91/ The voluntary procedure must provide for representation of manufacturers, packers, distributors, and consumers.l92/ If a voluntary product standard is adopted and the Secretary of Commerce is not satisfied ~h the industry's compliance he may recommend that Congress enact legislation providing regulatory authority to deal with the situation.l93/

The Secretary of the Treasury is responsible for enforcing the Act as it pertains to imported consumer commodities.l94/ The enforcement procedure is the same as that for enforcing the provi­sions of the Federal FOOd, Drug, and Cosmetic Act pertaining to imported food products.l95/

Poison Prevention P~ckaging Act

The Poison Prevention Packaging Act 196/ regulates the packaging and distribution of certain poisonous household substances. The term "household substances" includes any food, drug, cosmetic, fuel, or hazardous substance 197/ produced or distributed for individual consumption or use in the household.l98/ The Act incorporates the definition of food found in the Federal Food, Drug, and Cosmetic Act.l99/

The basic purpose of the Act is to provide for the establishment of special packaging standards 200/ for any household substance presenting a potential hazard to children.201/ Once a federal st~ard for a particular household substance has been adopted, no state may establish a

13

different standard.20?j The responsibility for establishing federal standards 'Was initially entrusted to the Secretary of HEW.203/ The responsibility for this and other functions of the Act has since been transferred to the Co~sumer Products Safety Commission.lQ~/

The Commission is directed to take into account the feasibility and practicability of any packaging standard it proposes.205/ It must rely on the available scientific, medical, and engi~ ~eering data concerning specialrackaging and must also consider the manufacturing practices of the industries affected by the Act.207/ The Commission is empowered to appoint a technical advisory committee composed of consumers, rna-;,;facturers, and scientists to assist in making these determinations

Inspection Acts

Federal Meat Inspection Act

The first comprehensive attempt to regulate the processing and sale of meat on the federal level •vas the Heat Inspection Act of 1907. One deficiency of that Act vJas that it did not stop the sale of unfit meat from packinghouses not subject to federal inspection. Congress overhauled the 1907 Act in 1967 r,1ith the \fnolesomc~ Jlileat Act 209/ which, among other changes, for cooper·a-tion betvveen state and federal inspection authoritieso210/

In its statement of legislative intent, Congress recognized that meat and meat food constitute an important part of our total food supply,2ll/ The Act ensures th.at meat and

meat products are wholesome, unadulterated, and ma~ked:-Tabeled, and packaged.l!_2_/ Congress felt that meat which does not meet these standards is injurious to the publlc health and destroys the 1narket for wholesome and properly packaged meat. Inferior meat can be sold at lm•er prices and othenJise unfairly compete processed and packaged meat 2 situation is detrimental to consumers and the , thus necessitating ne~11 meat legisla-

tion • ..:2l:::/

Ins_pection ~~'£_~ices. The present program requires examinm:ion of cattle, sheep, swine, goats, horses, mules, and other equines prtor to 2 diseased animals must be slaughtered separately from healthy The carcasses animals are subject to separate inspection and examination pursuant to USDA regulations

After slaughter, inspectors e3mmine all carcasses capable of haing used as human foodo218/ The carcasses are then marked as either "Inspected and passed" OI' and condemned .• " 217fT The condemned carcasses and any parts thereof must be destroyed in the presence of the inspector.220/ If a carcass initially passes but then subsequently becomes adulterated, the inspectors may ree;za~ mine it.Z2l/

Any meat or meat food product passing federal inspection and packed in a container or ;ceceptacle of any kind must have the notation "Inspected and passed"' on its label (or on the container or receptacle itsel£).222/ The federal inspection process is not technically completed until the meat or food product has been sealed in the container under the supervision of a federal of the inspection notation, or: any other offieial device, mark, or

The federal inspectors w·hich the meat :Ls Agr:tcul tu1·e If these at that

e;r;:am:lne not only the meat itself but also the sanitary conditions under at slaughterhouses a.nd parktng ,225j The Secretary of

regulations governing the sanitary conditions at such establishments, are not complied with, no meat may be labeled and

Adulteration" In addition to establishing federal inspection services, the Act also prohi­bits certain activities, Uninspected meat or meat products may not be transported in comme:rce.228/ Any act 10\J'hich adulterates meat or meat product being transported in commerce is also illegal.~/

Adulteration occurs vJhen the meat or meat product contains any poisonous or deleterious substance which· may render it injurious to heal

14

The conditions under which the meat was packed or processed may cause it to be adulterated. Preparation or storage under unsanitary conditions leading to contamination with filth or rending the product injurious to health, constitute adulteration.231/ The same is true if the meat consists wholly or partially of any filthy, putrid, or decomposed substance,232/ or if its container is com­posed in whole or in part of a poisonous or deleterious substance.233/

Standards of Identity and Fill of Container. The Act allows the Secretary to establish food identity 234/ and container fill standards for meat or meat products. These standards must be con­sistent with standards for the same food items under the Federal Food, Drug, and Cosmetic Act.235/ To achieve this consistency, the Secretary of Agriculture must consult with the Secretary of Health and Human Services before issuing food standards under either act.236/ The Secretary of Agriculture must also consult with the appropriate state authorities 237/ prio~o promulgating food standards so that state and federal standards may be consistent.238~

Personal Exemption

The slaughter of an animal by its owner is exempt from inspection requirements.239/ It is not, however, exempt from the Act's adulteration and misbranding provisions.240/ ---

An individual may slaughter an animal for consumption by his household, guests, or employees without complying with the inspection provisions of the Act. Custom-slaughter operations performed by any firm or individual for the owner's benefit enjoys a similar exemRtion. If the animal is custom-slaughtered, any packaged meat must bear the mark "Not for Sale. "]jJj The establishment per­forming the custom operation must be maintained and operated in a sanitary manner.

Imported and Exported Meat

Before being exported, animals must be inspected ~/ and an official certificate stating the animal's condition at the time of inspection must be issued.243/ No ship containing animals subject to federal inspection can leave port without this certificate.244/

Animal carcasses and parts intended for export also must be inspected.245/ An official cer­tificate, similar to the one required for export animals, is required.246/ The certificate must indicate that the animals were healthy at the time of inspection and that their meat is sound and wholesome.247/ The Secretary of Agriculture may waive the certificate requirements for individual countries.248/

Imported carcasses, meat, or meat food products must comply with the Act.249/ Upon entry into the United States, all such articles qualify as domestic articles subject to the Federal Food, Drug, and Cosmetic Act 250/ and the Federal Meat Inspection Act.251/ They must bear the required marks and labels listed in the regulations pertaining to imported articles.252/ One exception exists however, from compliance with these regulations: an individual may purchase up to 50 pounds of meat or meat products outside of the United States for personal consumption without falling under the Act's provisions on imported meat.253/

Imported meat which fails to comply with the Act must be destroyed or exported by the consignee within certain time limits.254/ If the sole reason for noncompliance is misbranding, it may be brought into compliance under-the supervision of the USDA.255/

Federal and State Cooperation

In passing the Federal Meat Inspection Act, Congress intended to assist state agencies in pro­tecting the consuming public from adultered or misbranded meat products.~/ It therefore authorized the Secretary of Agriculture to cooperate with state 257/ agencies in developing state meat inspection, reinspection, and sanitation requirements which are as least as stringent as those of the Act.258/ The Secretary may furnish advice in planning and developing the programs, technical and laboratory assistance, training, and financial aid.259/ Federal financial aid may not exceed 50 percent of the estimated total cost of any cooperative program.260/ Available funds must be equitably allocated among participating states.261/ ---

If the Secretary believes that a particular state has not developed or is not enforcing an inspection program as stringent as the federal program, he must notify its governor.262/ After a 30-day waiting _period, the Secretary may designate the state as one in which the federal meat

15

inspection provisions will apply to intrastate operations and transactions,263/ The Secretary must publish the designation in the Federal Register. Thirty days later the provisions of the Federal Meat Inspection Act become fully operative on intrastate transactions within the designated state.264/

The designation may be revoked if the Secretary determines that the state has developed and will enforce meat inspection provisions at least as stringent as the federal provisions.265/ Termination of the special designation does not preclude redesignation at a later date.':l66/ As in the original designation procedure, the Secretary must give thirty days notice to the governor and publish the designation in the Federal Register.267/

Poultry Products Inspection Act

The purpose of the Poultry Products Inspection Act 268/ is similar to that of the Federal Neat Inspection Act. Congress is seeking to protect, through this legislation, the health and welfare of consumers by assuring that poultry distributed to them are wholesome and properly packagedo26Y/ This goal is largely achieved through processing and distribution reg:ulations~270/ The Act establishes a system of inspection of lZ.!_/ and products, requires the maintenance of sanitary facilities and practices, and requires accurate and informative labeling.

The Secretary of Agriculture 272/ is authorized to inspect Hve poultry :in any establishment that processes poultry or poultry~·~- .]:].]_/ The Act also requi.res a post mortem inspection,27~/ The Secretary may impose quarantines on diseased birds, and any bird is subject to reinspection,ll2./

Any adulterated poultry carcass, part, or product must be condemned.277/ The condemnation decision F,ay be appealed, but in the absence of a appeal, an \vill supervise the destruction .of the poultry or poultry products for human food purposes 278 In the event of an appeal, the carcasses, parts, or products are appropr:i.ately marked and s,egregated pending tile completion of the appeal inspection.~/ If the Secretary determines that the appeal was frivolous, the appellant must bear the cost of the reinspectiono..£~.Q/ On the other hand, the carcasses, parts, parts, or products need not be condemned and destroyed if, through the pJCoc.essing, are again rendered ~.Jholesome. The reprocessing must occur under· the supervision of a USDA inspector >>~ho must find following the reprocessing that the or poultry products are no longer adulteratedo2!?J:_/

The USDA inspects not poultry and poultry , but also the premises, facilities, and equipment of poultry processing establishments.28~/ The Secretary promulgates regulations establishing appropriate sanitary p:ract.i.ces for these establishments. The Secretary ,flill not inspect any establishment that does not maintain sanitary conditions in accordance ''~lith these regu-' lations .l:!J]j

Basic Provisions

Prohibition of Adulter~. The Act makes it illegal for any person 28lf/ to sell, transport, or receive in commerce any poultry products requiring inspection under the Act unless and passed.285/ It is illegal to introduce adulterated or misbranded p1roducts into the stream of comn;-;;;;eiD286/ The statute also prohibits any act vlhic:h causes products to becom,e adulterated or misbranded. after transportatim1o~/

The .Act defines adulteration rather .A is adulterated if

1. it bears or contains any poisonous or deleterious substance >vhich may :render it injurious to healtho If the substance is naturally present in the product, the article is not adulterated if the substance does not render it it injur:i.ous to healtho288/

2. it bears o:r contains any added poisonous or deleterious substance which may make it unfit for human food.289/

3. it bears or contains an unsafe food additive J::!S!.,/ or an unsafe color additive,29l/ as those terms are used in the Federal Food, Drug, and Cosmet.ic Act

4. it consists wholly or partially of any filthy, , or substanceiD.ill/

16

5. its preparation, packaging or holding occurs under unsanitary conditions exposing it to contamination.~/

6. it is wholly or partially the product of any poultry W'hich has died by means other than slaughter.295/

7. its container is composed of any poisonous or deleterious substance which may render the contents injurious to health.296/

So it has been intentionally subjected to radiation.297/

9. any valuable constituent has been omitted or abstracted from the product, or any substance substituted therefore.298/

Prohibition of ~sbrandir:!£· Any of the following conditions can cause an article to be misbranded under the Act:299/ false or misleading labeling; offering the product for sale under the name of another fopd, unless its label clearly indicates that fact; packing it in a container that is misleading as to its contents; use of a container which does not bear the official legend and official establishment number of the processing facility and any other information which the Act requires is not placed prominently on the label. The label must also show the name and place of business of the manufacturer, packer, or distributor, and indicate the weight, measure, or numerical count of the product.300/ Reasonable variations from this last requirement are permissible, and the Secretary may establi~exemptions for small packages and for articles not sold in packages.30l/

If a poultry product contains any artificial flavorings, coloring, or chemical preservative, its label must indicate this fact If the product purports to be for speci.al dietary uses, its label must bear certain information concerning its vitamin, mineral and other dietary properties to inform prospective purchasers of the 's value.30]/ The Secretary determines the information required in consultation 'vith the Secretary of Health and Human Services •

.Q£~~rds, The Secretary may prescribe definitions and standards of identity for poultry or poultry products and standards of fill for their containers.].Q:~/ These standards must be consistent with those of the Federal Food, Drug, and Cosmetic Act. To ensure consistency, the Secretary must consult with the Seeretary of Health and Human Services before issuing standards.192_/ The Seeretary must also meet v1ith state advisory committees to avoid inconsistency between state and federal standards.

A poultry product represented as food must conform to the definition and standard prescribed by the Secretary. Failure to comply means that the product is misbranded. must bear the name of the food and must list any optional ingredients specified by the

of identity Its label USDA.l,Q£/

If a container fill standard exists, the article must meet that standard or indicate on its label that it does not meet the standard. If the label fails to reflect the fact that the product falls below the fill standard it is misbranded

]!,xemptions

Certain persons and organizations are exempt from the Act's inspection program,308/ Retail dealers who sell poultry products directly to consumers are exempt if the processing operation they perform is cutting up the poultry products on the premises.309/ Persons slaughtering or pro­cessing poultry according to recognized religious dietary ;;;re also exempt,31Q/ as are persons slaughtering poultry for 311 Custom slaughter of for an owner does not fall under the Act

The Secretary may also exempt any small enterprise that distributes its products solely >vithin the state in which it is located.lli/

The provisions in the Act for federal and state cooperation in inspection 314/ are analagous to those found in the Federal Neat Inspection Act.J.J:.2_/ In fact, a report issued by a committee of the House of Representatives acknowledged the similarity between the provisions found in the two acts.3l6/ The basic purpose behind both provisions is to assure the wholesomeness o£ as much meat and. poultry sold in ~ur country as is possible.].Q/

17

The Secretary may furnish technical and financial assistance in the planning and development of state inspection programs.318/ Federal funds may be used to pay up to half the cost of a joint inspection program.319/ ---

The Act does not supersede state regulation of purely intrastate operations unless a state fails to develop inspection standards which are at least as stringent as the federal guidelines.320/ This is similar to the authority granted to the USDA under the Federal Meat Inspection Act.321/ ---

Federal case law supports the proposition that the Act does not preempt state regulation of poultry inspection. In Canton Poultry, Inc. v. Conner,322/ the court upheld the Florida poultry inspection statute, which authorized the inspection, grading, and tagging of poultry products solely within the state. The court found that the program was nondiscriminatory because it locally pro­duced poultry offered for sale in Florida, as well as poultry shipped into the state.323/

A similar case 324/ in a state court held that congressional regulation of poultry in interstate commerce does not automatically preempt state regulation. In this case, a state regula­tion required the disclosure of the geographic origin of poultry and poultry products. The court found no actual conflict between the state requirement and the federal regulatory scheme, nor any evidence of congressional design to preempt states entirely.325/

Egg Products Inspection Act

The Egg Products Inspection Act 326/ is the most recent of the specialized inspection acts pat­terned after the Federal Food, Drug, and Cosmetic Act.327/ Its purpose and structure are similar to those of the federal meat 328/ and poultry 329/ inspe~n acts. Like its predecessors, Congress enacted it primarily to pr<ltect consumers from unwholesome, adulterated, and misbranded food.330/

Testimony taken by a congressional committee prior to the Act's passage 331/ indicated the great need for federal inspection to reduce or eliminate the transportation of cracked, leaking, or dirty eggs in interstate commerce. Defective eggs can spread harmful bacteria, particularly salmonella.332/ One reason for the new legislation, therefore, was to control potential health hazards.

A second reason for the Act was that state inspection laws were not entirely effective in halting the sale of unwholesome eggs.333/ At the time the federal Act was passed, 18 states had legislation concerning egg products but none required continuous inspection. Only eight states required the pasteurization of egg products. Five states had no requirements for egg products what­soever. The remaining states conducted inspection programs under either a general food law or another nonspecific law.334/

Basic Provisions

Inspection Program. The inspection program in this act is similar to those of the meat and poultry inspection acts. Inspections are conducted under the auspices of the Secretary of Agriculture 335/ with one exception: the Secretary of Health and Human Services retains jurisdic­tion over th~nspection of restaurants, institutions, and food manufacturing establishments.336/ The Secretary of Agriculture has the authority to inspect the operations of all plants processing egg products.337/

The Secretary of Agriculture 338/ is directed to set up a program of continuous inspection of egg products 339/ at each egg proc~ing plant.340/ If necessary, the products under inspection may be segregate~d reinspected.341/ The Act requires the condemnation and destruction of adulterated 342/ eggs or egg products unless the adulteration is removable through reprocessing.343/ Any reprocessing must occur under the supervision of the government inspectors, and the product ~t subsequently be reinspected. A processor may appeal a determination that its products are adulterated, but if the appeal is found to have been frivolous, the processor must pay all costs of the appeal.344/

Egg products must be pasteurized before leaving the processing plant.~/ The package or shipping container must bear an official inspection seal and the official establishment number of the processing plant. The forgery of an official mark or label is illegal.346/ It is also unlawful t~ knowingly represent that any article subject to this Act has been inspected when, in fact, no

18

inspection has occurred.347/ Punishment for violating these prohibitions can include fines or imprisonment.34'd/

Labeling. No label or container is permitted if it is false or misleading or has not been approved by the USDA.349/ The Secretary may stop the use of any container believed to be false and misleading as to its ~tents. The person or firm using the container may contest the Secretary's determination.350/ Following a hearing, the Secretary makes a final determination, which the pro­cessor may appeal to the federal courts.22!/

Exemptions

The Secretary may exempt certain products or activities from the Act.~/ For example, a poultry producer's sale of eggs directly to a noncommercial consumer may be exempt.353/ Similarly, the Secretary may also excuse a producer with fewer than 3,000 hens from certain provisions of the statute.354/

The Act does not cover egg products which are not for human consumption.12l/ that these products undergo a denaturing process prior to their transportation in merce. It also subjects them to special identification regulations.356/

Imports

The Act requires interstate com-

Imported egg products must be processed under an approved continuous inspection system operated by the foreign government 357/ and must comply with standards established by the Act.35'd/ Upon entry into the United States, the foreign products must meet the same quality tests as domestic articles.35Y/ The provisions of the Act regulating imports do not apply to eggs or egg products purchased outside the United States by an individual for personal consumption, or for consumption by family, guests, or employees.360/

Any imported articles which fail to comply with the Act must be destroyed under the Secretary's supervision or exported within a time limit established by the Secretary.361/ However, if the sole cause of noncompliance is misbranding, the defect may be corrected under the supervision of USDA representatives.362/

State and Local Regulation

The Act authorizes the Secretary to cooperate with state inspection agencies to promote its purposes.363/ The USDA may utilize employees of state agencies to carry out its egg inspection program i~t reimburses the state for its costs in the cooperative program.~/

Even though state agents may participate in a cooperative inspection effort, federal, rather than state, statutes and regulations apply. Furthermore, the Act prohibits the creation of state standards for processing plants in addition to or different from the federal standards.365/ The Act allows states to impose additional requirements in limited areas. For example, state ~rdkeeping requirements need not be identical to those of the federal government;366/ they must, however, be consistent with federal requirements.367/ In addition, states may require containers to list the name, address, and license number of any individual or firm processing the eggs.368/

Quality Control Legislation

Federal Insecticide, Fungicide, and Rodenticide Act

On the federal level, the registration and regulation of pesticides is governed primarily by the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). 369 I This act is not, however, the only federal statute pertaining to the use of pesticides on food-.--As we have previously seen,370/ FDCA 371/ authorizes the establishment of residue tolerances for all pesticide products desig~for use ~uman or animal food.372/ FIFRA basically provides for the registration and classification of these pesticides.373/ From-a legal perspective, the two acts are related.Jli/ They are also related in a practical sense: most pesticide manufacturers will simultaneously file for registra­tion under FIFRA and petition for the establishment of a tolerance level under FDCA.121/

19

Cla~sification of Pesticides

FIFRA was enacted in 1947 376/ and later overhauled by the Federal Environmental Pesticide Control Act of 1972.377/ The Act in its present form requires the registration of all pesticides (including those distributed entirely within states) with the administrator of the Environmental Protection Agency (EPA).378/

Registration specifies whether a pesticide is suitable for general or restricted use.379/ A pesticide classifies for general use if, when applied in accordance with its directions, i~ill not generally cause unreasonable adverse effects on the environment.380/ Restricted-use pesticides are those which, when applied according to directions, may generally cause unreasonable adverse effects on the environment, including injury to the applicator.381/ Use of a restricted-use pesticide must be supervised by a certified applicator.382/ No such restriction exis.ts for a general-use pesti­cide.

Different application methods may require different classifications.383/ It is possible, therefore, that a given pesticide may be classified for both general and re;tricted use. In that event, the general~use directions must be clearly separated from the restricted-use directions.384/

Cancellation or Suspension of Registration

A pesticide is registered for five years. At the end of this time, the Administrator 385/ can­cels the registration unless the registrant 386/ requests its continuation.387/ Even if th~ registration is cancelled, the Administrator may permit the continued use and sale of existing stocks of the pesticide.388/

Cancellation or suspension of the registration may occur prior to the expiration of the five­year period. An Administrator who finds a need to cancel registration or change the classification, must inform the registrant and the public.389/ The Administrator may then schedule a hearing to determine whether the registration should be cancelled or the classification changed.390/ Any per­son who could be adversely affected by the proposed action may also request a hearing.391/

The Administrator must take into account the impact of the proposed action on the production and prices of agricultural commodities, retail food prices, and the agricultural economy as a whole.392/ He must also inform the Secretary of Agriculture of the proposed action and provide an analysis of its likely impact on the agricultural economy.393/

The Act establishes a procedure for suspending registration.394/ The Administrator is authorized to suspend the registration only when necessary to pre~t an imminent hazard 395/ during the time required for normal cancellation or change of classification proceedings.396/ ---

Before issuing the suspension order, the Administrator must provide the registrant notice of the action and a copy of the findings relevant to the "imminent hazard" issue.397/ The registrant may request an expedited hearing on the question of whether an imminent hazard exists.398/ If there is no such request within five days of the receipt of the notice, the suspension takes-;ffect and is not subject to judicial review.399/

If an emergency does not permit a hearing prior to suspension, the Administrator may issue a suspension order immediately and then notify the registrant of the action taken.!QQ/ This emergency order remains in effect until an expedited hearing is completed.

In evaluating the economic effects of a proposed suspension or cancellation, it is not necessary to show that the alternative means of pest control will be as effective. In a recent case,401/ the EPA determined that crop surveillance for infestations, together with the application of post-emergence baits or sprays, provided an effective alternative to the indiscriminate use of chlordane; the agency therefore suspended registration of the pesticide. The court upheld the EPA's determination that the benefits derived from the suspension outweighed any economic harm done and decided that there was no basis for disturbing the agency's balancing of the costs and benefits.

Registration of Establishments

The Act requires the registration of any establishment which manufactures pesticides.402/ The establishment must submit to the Administrator annual reports on the types and amounts of pesticides it'produces.403/ EPA employees may enter any establishment holding pesticides for sale or distribu-

20

tion for the purpose of inspection and sampling.404/ If the inspection gives reason to believe that the Act is being violated, the Administrator may issue an order stopping the pesticide's sale, use or remova1.405/ In addition, the pesticide be seized through an in rem federal court proceeding because of (1) adulteration or misbranding, failure to register in accordance with the Act, (3) omission of .required information from the label, (L.,) coloration in violation of the Act, or (5) the existence of claims or directions for use different from those made in c.onnectj_on with the pesticide's registration.406/

Penalties

The Act provides for both civil and criminal penalties.407/ Civil penalties include a fine of up to $5,000 for each offense.408/ Criminal penalties are a~lable against those who "knowingly"' violate any provision of the Act, and include imprisonment as well as fines.409/

F'illed Milk Act

The Filled Milk Act 410/ prohibits the manufacture or interstate transportation of "filled milk"' ,411/ any milk or crMm (includ:!.ng condensed, evaporated, concentrated, powdered, or dried milk) ~which any fat or oil other than milk fat has been added,412/ and whic.h imitates or resembles milk or cream. Such articles are adulterated and injurious to the public health and their sale constitutes a fraud upon the public.~~/

Since its enactment in 1923,414/ the Act has been the subject of quite a bit of litigation. Some of the earliest cases were c-;;ru;titutional challenges brought before the Supreme Court. In U.S. v. Carolene Products Co.,415/ the manufacturer of a compound made from condensed milk and coco­nut oil argued that the Act violated the due process clause of the Constitution. In upholding the Act, the Court stated that a rational basis for the statute should be presumed unless there are knmvn facts contrad:i.cting this presumption. The court went on to point out that, prior to the passage of this legislat:i.on, extensive research revealed the injurious effects of consuming substi­tutes for pure milk. The research also shmved that milk from which butterfat had been extracted was lacking in vitamins A and D. The court held that Congress did not violate the due process clause in enacting legislation designed to correc.t these nutritional problems.

A 'later case 416/ involved the distribution of a filled milk product which vtas admittedly who­lesome and properly labeled. The manufacturer argued that it was a violation of due process to include its product in the category of prohibited filled milk products, The product was made from skimmed milk, cottonseed oil, and fish liver oil, and was virtually indistinguishable from whole milk products. The court determ:i.ned that the Act sought not only to ensure wholesomeness but also to correct the problem of vHamin deficiencies presented by filled milk. The fact that the milk compound in question was tvholesome and nutritious did not exclude it from the regulated class. The court also held that Congress designed the Act to prevent consumers from confusing filled milk \vith ~Jhole milk. Since the defendent' s milk compound so closely resembled whole milk, it violated the Act, notwithstanding the fact that no ingredient had been added to the compound to make it simulate whole milk. Proof of conscious imitation is not necessary as long as the product is normally per­ceived by purchasers to be whole milk.

Case law has established that it is not necessary to show that the filled milk product was intentionally shipped in interstate commerce in order to prove a violation of the Act.Lil7/ It is sufficient that the product falls wj_thin the Act's definition of Ulled milk and has b~ manufac­tured or transported in :interstate commerce.

A 1972 federal district court d.eclsion 418/ has east some doubt on the continued validity of the Act. In recent years imitation dairy products have been developed 'Vi'hich are nearly identical to the prohibited filled milk products, Since these netv products do not technically come "'1ithin the definition of filled milk, they are not prohibited, This discrepancy in treatment led the dj_strict court to examine the constitutionality of the Act.

The plaintiff in the case manufactured a filled milk product consisting of a blend of fat~free milk and soya oil. The new market conditions brought into quest:l..on prior court rulings on the constitutionality of the Act. The court noted that the nev1 imitation dairy products were competing directly with the filled milk products of the plaintiff and other manufacturers and were no less likely to be confused with whole milk products.~/ Because the two types of products were so simi-

21

lar in composition, appearance, and use, the difference in treatment under the Act violated the due process of law to which the plaintiff was constitutionally entitled.

Filled Cheese and Adulterated Butter Acts

Until recently, filled cheese and adulterated butter were regulated under federal statutes.420/ However, Congress repealed the Filled Cheese Act in 1974 421/ and the Adulterated and Process or--­Renovated Butter Act in 1976.422/ While they were in force, both of these acts were essentially taxation measures administered by the Treasury Department to regulate the sale of the products.

Although the acts have been repealed, the products which they regulated are still covered by other federal statutes. For example, cheese and butter are subject to the adulteration and tolerance standards of the Federal Food, Drug, and Cosmetic Act 423/ and the labeling standards of the Fair Packaging and Labeling Act.424/ These products are naturally included in the definition of "food" as used in those acts. The repeal of the Filled Cheese Act and the Adulterated and Process or Renovated Butter Act served only to remove the special taxes on these items.

Federal Import Milk Act

The Federal Import Milk Act 425/ regulates the importation of dairy products in two important respects. First, it establishes 8LPermit program, administered by the Secretary of Health and Human Services, for any importer of milk or cream.426/ Secondly, it authorizes Secretary to impose inspections where necessary to insure that milk and cream are fit for importation.427/ Inspections are made of the bacteria count in raw milk, the sanitary conditions of dairy farms and plants, and the temperature at which the milk is maintained during 'the importation period.428/ The Secretary retains the power to suspend or revoke any permit.429/ ---

Food Grading Acts

Agricultural Marketing Act of 1946

The Agricultural Marketing Act of 1946 430/ gave the USDA authority to establish grading stan­dards for various foods and food products. The Act directs the Secretary of Agriculture to "develop and improve standards of quality, condition, quantity, grade, and packaging and recommend and demonstrate such standards in order to encourage uniformity and consistency in commercial practices."431/ Unlike the standards established pursuant to the Federal Food, Drug, and Cosmetic Act,432/ which set minimum criteria, the USDA grading system provides for of a whole range of food qualities.

In addition to authorizing the development of food standards, the Act also consolidates USDA market research activities within a single administrative agency 433/ and implements cooperative efforts with state agencies and private organizations to improve the efficiency of food marketing.434/ The legislative history of the Act indicates that the principal reasons for these changes we~(l) to promote through research and federal and state cooperation a scientific approach to the problems of marketing, transporting, and distributing agricultural products, (2) to reduce distribution costs, (3) to narrow the price spread between the producer and the consumer, and (4) to develop new and wider markets for American agricultural products.435/

The Food Grading System. The Food Safety and Quality Service of the USDA is authorized by the Act to develop and improve food standards.436/ The USDA grading system is voluntary; when_ it is used, the food must satisfy the proper criteria for the designated grade.

Food products for which standards have been developed include fresh 437/ and processed 438/ fruits and vegetables, livestock and meats,439/ rabbits,440/ poultry,441~gg products,442r-S'hell eggs,443/ and dairy products.444/ Standards for certain other agricul~al products are promulgated by the Secretary pursuant to Other federal statutes.445/

The factors considered in grading food vary. Some of the most commonly used criteria are color, cleanliness, freshness, firmness, size, shape, texture, damage, and ripeness.446/

22

The grading system for any particular food may be rather detailed. For example, apples intended for processing are governed by different regulations than those governing other apples. Apples for pro­cessing may be graded "U.S. No. 1," "U.S. No. 2," or "U.s. Cider."447/ Other apples are graded as "u.s. Extra Fancy," "U.S. Fancy," "U.S. No. 1," "u.s. Utility," or7combination of any two of these grades.44tl/

The number of possible grades for a given agricultural product can vary widely. Florida grape­fruit have ten possible grades,449/ while broccoli greens have only one.450/

The USDA grading service for livestock provides for the determination of the class, grade, and other qualities of the livestock.451/ "Class" refers simply to the major groups within each spe­cies. The grade is determined in-accordance with the prescribed regulations.452/ The grading ser­vice is available for livestock traded in interstate commerce, or where the USDA determines that its use would facilitate the commercial marketing, distribution, processing, or utilization of agri­cultural products.453/

The unauthortzed use of a USDA grade stamp or label is prohibited. In Arrow Meat Co. v. Freeman,454/ employees of a meat packing plant had marked meat with a USDA "choice" stamp without the authorization of the federal grader. Federal meat grading services were subsequently suspended for 30 days.

In another case,455/ the Secretary of Agriculture suspended the license of a potato growers' cooperative for repeated violations of the statutory grading standards. Under the terms of the suspension, the cooperative could not trade in perishable agricultural commodities for a period of 60 days. The court upheld the suspension.

Federal and State Cooperation. One of the Act's primary purposes is to promote cooperation among state and federal agencies in solving the problems of marketing, transporting, and distri­buting agricultural products.456/ In furtherance of this goal, the Secretary has the authority to enter into contracts and agree;ents with states and state agencies for the purpose of conducting research and service work, making and compiling reports and surveys, and carrying out other relevant functions.457/ The results of any joint research must be made available to the public.458/

Cooperative efforts with state agencies or private institutions are undertaken when their func­tions will be carried out more effectively, more rapidly, or at less cost than if performed by the USDA alone.45Y/ According to the interpretations of one court, however, this sort of cooperative effort is noc-mandatory. In P.A.M. News Corp. v. Butz 460/ the court held that the Act merely urges, but does not require, consultation with state agencies.

u.s. Grain Standards Act

The official standards for grain were adopted pursuant to the u.s. Grain Standards Act 461/ of 1916,462/ revised in 1968,463/ 1976,464/ and 1977.465/ The Act establishes official standards for grain:-promotes uniform application ~these standards by official inspection personnel, establishes an official inspection system for grain, and regulates the weighing and certification of grain being shipped in commerce.466/ The underlying objective is to ensure the orderly and timely marketing of, and to facilitate tr~ in, u.s. grain.467/

The Act created the Federal Grain Inspection Service,468/ an administrative agency of the USDA. The Administrator of the Federal Grain Inspection Service is responsible for administering the Act, as well as establishing policies, guidelines, and regulations to carry out its provisions.469/ The Administrator may also perform related functions for grain and grain products under the authOrity of other statutes administered by the USDA if the Secretary delegates those functions.470/

Development of Grain Standards. The Act authorizes the Administrator to investigate the handling, weighing, grading, and transportation of grain;471/ to establish standards of quality, condition, class, and kind for corn, wheat, rye, oats, barley, flaxseed, sorghum, soybeans, mixed grains, and other such grains where warranted;472/ and to set up procedures for accurate weighing and weight certification, including equipment calibration and maintenance.473/

Once grain quality standards are established, no sale or consignment for sale of that kind of grain may employ grade designations other than the official ones.474/ This restriction applies to any advertising, price quotation, container labeling, sales contract, invoice, bill of lading, or other document relating to the grain. Additional information may, however, be included along with

23

the official grade designation. For example, the parties to a contract for the sale of grain may stipulate additional grain quality requirements.475/ Furthermore, a proprietary brand name or tra-demark may be used in describing grain if it does not r~semble an official grade designation.~/ The use on export grain of an official grade designation or other false or misleading descriptive information prohibited by the Act.477/

Official inspectors determine the grade of a particular lot of grain by sampling. According to regulations promulgated under the Act, the owner or shipper of the grain may appeal the official determination of the grade.478/ It may, in fact, be in his best interests to do so. In Tulsa G!ain Storage Co. v. CommoditY Credit Corp.,479/ the shipper's failure to exhaust this administra­tive remedy precluded him from making a subsequent collateral attack on the official grade deter­mination.

Any of the established standards or procedures are subject to amendment or revocation whenever the necessities of modern grain trading require.480/ As a general rule, any amendment or revocation of standards does not become effective until one year after its promulgation 481/ unless the Administrator determines that such action is in the best interests of public welfare and safety.482/

Inspection and Weighing. The Act prohibits the shipment of grain from the United States to any foreign port unless it has been officially weighed and inspected.483/ The shipper must secure a certificate showing the official grade designation and weight of the grain. The consignee receives this certificate along with the bill of lading and other legal documents covering the shipment.484/

In addition to the inspection, all grain transferred into or out of an export elevator at an export port 485/ must be weighed according to official standards and procedures.486/ Whenever a lot of grain is ():f:ficially inspected and weighed during transfer into or out of a grain elevator, ware­house, or other storage or handling facility, the inspector issues an official certificate showing its grade designation and certified weight.487/ All official inspection and weighing must occur under the supervision of representatives of the Administrator.488/

The Administrator may waive inspection in an emergency if the basic objectives of the Act are impaired.489/ The parties to a contract for the sale of grain may also mutually agree to forgo the official inspection. If the Administrator 490/ receives a copy of the contract prior to the ship­ment,491/ shipment from the United States may occur without inspection.

Delegated Inspectors. The Administrator may delegate to qualified state agencies the authority to conduct inspections at export port locations within the state.491/ Prior to delegating inspec­tion authority, the Administrator must determine whether the agency is qualified to conduct grain inspections and issue findings based on that investigation.493/ The evaluation must take place in consultation with the Department of Justice, the USDA Office of Investigation, and the General Accounting Office.494/

The delegation of inspection powers may involve all of the inspection functions or only spe­cified ones. The official inspection continues to be the direct responsibility of the Administrator.495/ The Administrator may revoke any delegation of the inspection power at his discretion upon proper notice to the state agency.496/

Agencies may be designated for points other than export port locations. Upon application, any person or state agency may be designated as an official agency.497/ The agency would then serve at locations where the Administrator has determined official inspection is needed.

The applicant must demonstrate that it is qualified to be an official agency. At present, the requirements are quite stringent. Among other things, the applicant must show that (1) it has ade­quate facilities and qualified personnel for the performance of official inspection functions; (2) it will periodically rotate inspection personnel among grain storage and handling facilities; (3) it will meet training requirements and personnel standards promulgated under the Act; (4) it will not charge discriminatory or unreasonable inspection fees; (5) it will not use any money collected through fees for any purpose other than the maintenance of the official inspection program or other state-run agricultural programs, and (6) it will maintain complete and accurate records of its activities and fiscal operations.498/

The designation remains in effect for no longer than three years,499/ and can be renewed or amended.500/ The Administrator may revoke an agency's designation if it fails to meet the require­ments.501/ An opportunity for a hearing must ordinarily be afforded. In an urgent situation,

24

however, the Administrator may temporarily suspend the designation without an opportunity for a hearing. The Administrator must have reason to believe that there is cause for revoking the designation, and the suspension must be in the best interest of the overall inspection system. The agency must have an opportunity for a hearing within 30 days of the suspension.502/

Licensing. The Act provides for the licensing of individual inspectors as a means of ensuring technical competence in the inspection and weighing of grain.503/ The Administrator may license any employee of a designated official or state agency,504/ or of the Federal Grain Inspection Service.505/ A valid license is required to perform any official weighing or inspection functions.506/

A license terminates three years after the date of issuance, unless renewed.507/ It is automa­tically suspended if the licensee ceases employment at a designated agency.508/ The license may be reinstated if the licensee resumes employment with a designated agency wit~one year of the suspension date, provided the license has not expired in the interim.509/

The Act authorizes the Administrator to give an examination for the purpose of determining the competence of prospective licensees.510/ Under current regulations, the examination tests aptitude in specific tasks like color perception, differentiation of grain conditions, knowledge of inspec­tion procedures, and knowledge of the u.s. Grain Standards Act.511/ Other factors taken into account include the applicant's educational achievement and work experience.

Export Standards

Special legislation authorizes quality standards for certain foods intended for export. Basically, there are two separate acts, one covering apples and pears,512/ and the other covering grapes and plums.513/ The purpose of these acts, according to the legislative history, is to pro­tect the reputation of American-grown fruit in foreign markets.514/

The two acts are similar in structure and function. Both prohibit exportation of the named fruits unless they meet a quality standard established by the Secretary of Agriculture.515/ A cer­tificate must accompany the fruit, showing that it meets the USDA quality standard.516~he Secretary may prescribe requirements, other than those of grade, which the fruit must meet before receiving a certificate.517/ Any interested person may make recommendations as to any proposed standard prior to its adoption.

Some foreign governments have established standards different from their American counterpart. In that instance, the Secretary may inspect the fruit to determine if it complies with the standards and requirements of the country for which it is destined.518/ Special certificates may be issued under these circumstances.~/

A reasonable fee is collected to cover the costs of the inspection and certification services.520/ The Secretary may enforce the Acts by refusing to issue inspection certificates to any person-who violates them 521/ for up to 90 days. Persons who violate provisions of either act are also subject to fines of ~to $10,000.522/

The Acts do not cover some shipments of fruit to foreign ports. The Secretary may exempt, for example, any variety of grapes or plums; he may also exempt the shipment of prescribed minimum quan­tities of grapes and plums.523/ Similarly, producers may ship apples and pears in less than carload lots to any foreign country without complying with the Act.524/

Food Inspection and Grading by the Department of Commerce

The Department of Commerce is responsible for developing food standards for fish, shellfish, and fish products. Originally, the USDA had jurisdiction over this area under the Agricultural Marketing Act of 1946.525/ In 1956, the Fish and Wildlife Act transferred these functions to the Department of the Int~r.526/ Fourteen years later, they were transferred again, to the Commerce Department.527 I --

The Commerce Department also is responsible for inspecting fish, shellfish, and fish products. The Secretary of Commerce has promulgated fishery products regulations and has implemented fishery product inspection services.528/ Use of the inspection services is voluntary. Any person desiring to _operate an establishment under the inspection service must first seek approval of the facilities

25

as an official establishment marks.

Once approved, the inspectors may use U.S. grades and inspection

As a condition for providing the inspection service, the Department of Commerce requires the use of only wholesome raw fish which are handled under sanitary conditions and are suitable for pro­cessing. Failure to comply with the Commerce Department regulations means that the product will be deemed contaminated.53U/ Separate requirements exist for efficiently discovering and segregating contaminated fish products.

u.s. \~arehouse Act

Originally enacted in 1916,531/ the United States Warehouse Act 532/ establishes standards for the safe storage of agricultural']Jr'oducts in federally licensed vJarehouses In general terms, the Act provides for a national system of bonding to protect those \<Yho deposit grain in vJarehouses, establishes warehouse receipts as a secure and read:Uy negotiable form of property, and utilizes a uniform system for_ the inspection and grading of grain.]34/ The achievement of these goals aids both producerB and consumers of agricultural commodities, The Secretary of Agriculture is authorized to issue to any warehouseman a lieense to operate a r,mrehouse in with the provisions of the Act,536/ The warehouse must be suitable for the proper storage of the agri­~ultural product(s) fo~r 1/vhich the license is issued. The USDA may investigate the warehouse p:dor to issuing tl-le license to ensure The Secretary rrl.Bly also issue licenses. to persons who weigh, inspect, sample, or classify at the Any licensed individual must agree to abide by all the terms Warehouse licenses may be suspended or revoked if the licensee fails to comply T.lli th any of the Act or Ni th any regulation pro-mulgated under its authority,S'W/ or charges unreasonable or exorbitant fees for services renderecl.54l/ Prior to taking any such action, the Secretary must afford the licensee an opportunity for a hea~g.S4.2/ The Secretary must publish a list of the licenses that have been terminated and the reasons for their

Each warehouseman for a license must execute and file '&ifith the Secxetary a bond to secure the faithful of his obligations The Secretary terms and con-ditions of the bond and may require fire and other types of insurance,5LI5/ files an approved bond vdth the Secretary, the vmrehouse qualifies as a bonded-~

Any fungible product intended f01r interstate or foreign commerce in a federally licensed 1;varehouse must undergo inspection and gr·ading by a person under the Act to perform these functions,S/~!:1/ The Secretary has the authority to establish appropriate grading standards,549/ The U.S7W'arehouse Act accepts legislated standards as the offi-cial standards for the agricultural products to which they relate, For example, the grain standards used for purposes of this act are the official standards of the U.S. Grain Standards Act.550/

As general separate.22!/ He have been at the warehouse.

rule, a warehouseman :!.s required to keep the products stored various must also separate the lots from the same depositor for ,,7hich separate receipts

This rule facilitates the identification and redelivery of products deposited

If authorized by custom or agreement, however, a rwarehouseman may mingle fungible .agr:!.cultural must be of the same kind arid grade, The ware­for the care and. redeli·very of his share of the

products stored in his warehouse.553/ The houseman reinains product.

liable to each depositor

Each receives a receipt. for all products stored in a warehouse licensed under the Act.SS!j/ The receipt must shm<' oth(~r things) (l) the location of the \<Jarehouse, (2) the date of i~ance and consecutive number of the receipt, (3 the rate charged for storage, (4) a descrip­tion of the product received, and (5) a statement indicating whether the product will be delivered to the bearer of the receipt, to a specified person, or to the person,, s The receipt bears the signature of the warehouseman or his authorized agenL 556/ A receipt may be either nego­tiable or nonnegotiable. If it is nonnegotiable, that fact must be plainly indicated on its face,557/ ~

26

A warehouseman must deliver the products stored in his warehouse on demand to the holder of the receipt.558/ The original depositor may demand delivery if his demand is accompanied by an offer to satisfy the warehouseman's lien and an offer to surrender the. receipt with any endorsements necessary for its negotiation.559/ The depositor must also, if requested, sign an acknowledgment that the products· have been delivered.560/ After the products have been delivered the warehouseman must cancel the receipt.561/ ---

The Secretary may establish rules and regulations governing the operation of warehouses storing various agricultural commodities.562/ Current regulations cover cotton,563/ grain,564/ tobacco,565/ wool,566/ dry bean,567/ nut,568/ syrup,569/ cottonseed,S70/ and field warehouses.57~ The ware---­houseman must keep complete and accurate-records of all commodities stored in the-;arehouse,572/ showing all of the receipts that have been issued and all of the receipts that have been ret~ed and cancelled. He may be required to send reports to the USDA. It may require operators to report on the conditions, contents, and operation of their business.S73/

USDA inspectors may examine products stored at any federally licensed warehouse to determine if the warehouseman is complying with the statute and regulations.S74/ The books, records, papers, and accounts of the warehouse are open .to inspection.575/ If the inspection suggests that the ware­houseman is not fully performing his duties under-the Act, a hearing will be held.576/ The Secretary may publish the findings of the hearing.S77/ ---

Federal-State Relationship

As originally enacted, the Act did not preempt warehouse regulation and licensing by states.S78/ In 1931 Congress amended the Act to make federal law controlling in this area.~/ The Secretary holds exclusive licensing authority.S80/

The Supreme Court has reviewed this federal preemption of warehouse regulation. At issue in Rice v. Santa Fe Elevator Co. 581/ was an Illinois statute regulating warehouseman, rates, rebates, and other matters already regulated by federal law. The Court ruled that the federal act supersedes state law, except to the extent that it fails to cover the field or makes express exceptions in favor of state law.S82/ If the state law attempts to act in any way contrary to the federal sta­tute, the latter pr~ils even though it may involve lower standards than that proposed under the state plan.

The Court also held that states are free to regulate matters untouched by the warehouse act.583/ The Illinois act required prior state approval in three areas which the Court found were not covered by the federal legislation: (1) management, construction, engineering, and other contracts between the warehouse and its affiliates, (2) contracts and leases between the warehouse and other public utilities~ and (3) issuance of securities.S84/ The u.s. Warehouse Act contained no provisions relating to these three areas. ---

The Act does, however, authorize the Secretary to cooperate with state officials in charge of administering state laws relating to warehouses, warehousemen, weighers, graders, inspectors, samplers, and classifiers.S85/ Cooperation is at the discretion of the Secretary.586/

Penalties

Penalties for violation of the Act can be quite heavy. A warehouseman who converts for his own use any agricultural products stored in his warehouse faces imprisonment of up to 10 years 587/ and fines of up to $10,000 or double the value of the products involved.~/ If the violator is fined, the rightful owner of the converted property can seek reimbursement for his loss from the money collected by the Secretary of Agriculture.~/

Standards of Weight and Measure

A uniform system of standard weights and measures is an important means by which the federal government controls the manufacture and sale of food. The Bureau of Standards within the Department of Commerce is responsible for developing quantity standards applicable to various consumer pro­ducts, including food.590/ The Bureau also maintains the actual weights and measures which serve as permanent standards. ---

27

In addition to developing comprehensive quantity standards applicable to all consumer products, the Commerce Department also is responsible for one standard specific to the food industry: the standard for barrels.591/ Its authority is derived from the Standard Barrels Act, originally enacted in 1912.2_~./ --

The Act specifies the physical dimensions for barrels designed to hold apples,593/ fruits, vegetables, and other dry commodities.594/ If a barrel does not meet the specifications it is below standard, unless it is marked to indieite the fractional relationship between actual and statutory capacity.595/ The Act makes it unlawful to transport in interstate commerce any barrel below stan­dard.596/-:Reasonable variations from the standards may be permitted by regulations issued by the Bureau of Standards and approved by the Secretary of Commerce.597/

Until 1968 there was specific legislation establishing standards for baskets and containers for fruits and vegetables.598/ Although this legislation was repealed, these types of containers still fall under the auspices of the Fair Packaging and Labeling Act.599/ As discussed previously,600/ the Commerce Department may ask Congress to enact specific legislation to counteract an undue proli­feration of product sizes.

Comparison of Legal Standards: Packaging and Labeling

Although consumer-oriented food statutes take many different forms, they share some common goals, e.g., ensuring that food meets minimum quality standards; ensuring that packaged foods live up to the descriptions found on their labels or containers; and making the consumer's job easier by standardizing the sizes and forms used in marketing various types of food.

There may be a number of statutes relevant to the processing and distribution of any particular food item. It is not surprising, then, that there is some overlap in certain areas. In fact, for any given area of market regulation, there are probably a number of applicable statutes. Therefore, it is useful at this point to compare the effects of the various statutes within a particular regu­latory area. Packaging and labeling is used here as an example.

Federal Food, Drug, and Cosmetic Act and the Fair Packaging and Labeling Act

Many provisions of the Federal Food, Drug, and Cosmetic Act 601/ and the Fair Packaging and Labeling Act 602/ are similar, especially in regard to the packaging and labeling of food.603/ The Fair Packaging and Labeling Act provides that its regulations are to be promulgated 604/ a~ reviewed 605/ in the same manner as those of the Federal Drug, Food, and Cosmetic Ac~

A large number of packaging and labeling regulations apply to both acts,606/ and are admi­nistered by the Department of Health and Human Services through the FDA.607/ --

On the other hand, some packaging and labeling regulations derive from only one of the acts. For example, under the Fair Packaging and Labeling Act, the Secretary of Commerce can promulgate regulations for voluntary product standards.608/ There are no comparable regulations derived from the Federal Food, Drug, and Cosmetic Act. This section covers only those regulations applicable to both acts, while the subsequent section deals with the other packaging and labeling regulations.

Basic Regulations

Two important terms, "principal display panel" 609 I and "information panel," i!Q./ are used in the regulation of food packaging and labeling. The principal display panel is that part of the label most likely to be displayed, presented, shown, or examined under customary conditions of display for retail sale.611/ The information panel is contiguous to and to the right of the prin­cipal display panel.612r-ICertain information must appear on each panel, while other information may appear on either panel.613/

The principal display panel must contain a statement of identity; i.e., the common or usual name by which the food is known.614/ Additional identity information may be necessary, depending on the circumstances.615/ If the food can be marketed in various forms, e.g., whole, sliced, or diced, then the form should ordinarily be shown on the panel.616/ This regulation does not apply if the form is depicted by an appropriate picture or is clearly visible through the container.617/

28

information must be printed in bold type and in a size reasonably related to the other prominent information printed on the principal display panel.618/ lrlhere a package bears alternate display panels, the required information must be duplicated Oi1each paneL!;.!~/

The label must specify the name and place of business of the manufacturer, packer, or distribu~ tor:,b20/ In the case of a corporation, the actual corporate name must be used.621/ If the food is not rr;nufactured by the firm listed on the label, the ~ame must be qualified byaphrase that reveals the connection that firm has '-'Jith the food.622/ If the packaged food is manufactured at a location other than the manufacturer's principal place of business, the label may state the prin­cipal place of business rather than the actual place of manufacture, unless such a statement would be misleading.623/

The ingredients for a food product must be listed on either panel common or usual name in deseending order by weight,,621\,/ As a general rule, specific rather than generic names must be used to describe ingredients.~/Special rules apply to spices, flavorings, colorings, and chemieal preservatives,~/

Ingredient labeling is regulated in conjunction IIJith food identity standards, which specify mandatory and/or optional ingredients.627/ Optional ingredients must be listed on the label if they are contained in the food.628/ Mandatory ingredients (those required the identity standards) need not be listed on the labeL629/ Evidently the lavJ assumes the consumer will know that th,e man­datory ingredients are present inan item with a particular food identity. The FDA apparently is not entirely satisfied with this approach, and encourages all manufacturers and distributors to disclose ~al-1:, ingredients in a standardized food."~}O/

A food package may indicate the number of servings it :contains. If it does so, it must also indicate the net quantity per The unit of measurement used to designate th8 serving size does not have to be the same as used to designate the package's net contents.632/ For example, a conta:Lntar of oatmeal \llhich :ts measured in ounces could designate its net quanti:-ty per serving :l.n terms of cups. The unit. of measurement must be used in eooking, and the state-ment of quantity per serving must not be mis

Nutrition Label.1:E.g_

Any food that contains added vitamins, minerals. or protein must meet special labeling require­ments.63Lf/ These requirements also apply if any nutrltional claim or information appears on the label or in advertising for the product,b35/ The m-::mufacturer does not meet tb.is requirement ;uerely by making nutritional information available upon written request.

All nutrient quantities (including vitamins, minerals, calories, protein, , and fat) must be given for the average or usual serving 637/ of the product.638/ For foods which are typically consumed more than once a day, a separate column of figures may-be used to designate the nutrient quantities in relation to the average amount consumed on a daLly basis.639/ The declara­tion of nutrient quantities must be on the basis of the food as packaged.640/ 1::-separate column of figures may declare the nutrient quantlties on the basis of the food as CO'ri:"Sumed after cooking or other specified methods of preparation.!:!:!/

Detailed regulations govern the measurement of calories, proteLn, , and fat con-tent for labeling purposes"6LJ2/ If proteins, v:i.tamins, or minerals are added, the label must

the amount of these n;:;:trients a.s a percentage of the U,So Recommended Daily Allmoances (U.S. A manufacturer may not d.a.tm that a food is a significant source of a particular nutrient

contains at least ten perce,nt of the U.S, RDA for that nutrient in a single serving.6lt-4/ Furthermore, a food is not superior to another food unless lt contains as least ten percent more of the UoS. RD.A for the claimed nutrient.6L;5/ Special rules apply for listing U.S. JIDA levels on food sold for infant The regulations flatly prohibit certain nutritional or medicinal claims "647/ A label may not St!Cggest that the food, because of the presence or absence of certain dietarY properties, is effective :i.n the prevention, cure, or treatment of any disease.6L;8/ Nor can manufacturers imply that a balanced diet of ordinary foods will not supply an adequate anwunt of nutrientsc649/ A manufacturer or distributor may not suggest that a natural vitamin in a food is superior t~n added or synthetic vitamin.650/ The label may not differentiate in any >ray vitamins naturally present from those which havebeen added.65l/ If any of these representations or suggestions appear, the food is mislabeled.652/

29

Special Regulations Under the Fair Packaging and Labeling Act

In addition to the regulations shared with the Federal Food, Drug, and Cosmetic Act, the Fair Packaging and Labeling Act is also the source of more specialized packaging regulations 653/ relating to the power of the Secretary of Commerce to request the formulation of "voluntary product standards."654/ A voluntary product standard is simply a standard for measuring the weight or quan­tity manufacturers use in distributing a particular commodity for sale at retail.655/

Before the process of developing voluntary product standards begins, the Secretary of Commerce must determine on a case-by-case basis whether there is an "undue proliferation" of sizes and con­tainers for a particular food product.b5b/ Any person or group, including a state or local govern­mental entity, can inform the Secretary ~f the possible existence of undue proliferation.657/ A hearing on the issue will take place,658/ after which the Secretary can make a final determination of the existence of undue proliferati~if the evidence and testimony so warrant.659/

After such a finding, the Secretary must invite manufacturers, packers, and distributors of the affected commodity to participate in the of voluntary product standar-ds.660/ Since the process is voluntary, the industry cannot be required to develop and comply '.J'ith the product stan­dards, However, if a standard is not adopted within a year after the initial request, the Secretary may recommend to Congress that it enact legislation giving the Department of Commerce the authority to develop mandatory product standards.b6l/ The Secretary can also make this recommendation if voluntary standards are not effective,b62/

Voluntary product standards limit the variety in size and shape of containers for various food items. These are essentially quantity regulations, but the Secretary has authority under the Act to regulate the nonfunctional slack fill 663/ of packages containing consumer commodities as welL664/ The Secretary may also regulate the useof representations that food is being offered for retail sale at price lmver than the or customary price Cocents-off" provisions) or that a retail

advantage is available because of the size of the package or the quantity of its contents provisions)

A "cents-off" representation is valid if it meets certain criteria. The product must have an established regular selling price at the retail The sponsor 1 s :selling price and the selling price at all subsequent in the marketing process must be less than the :regular price by at least the savings differential represented on the packaging.668/ The sponsor and all sub­sequent sellers must maintain records for each promotion. These rTc'Ords must show a reduction in the cost to the retailer in an amount sufficient to enable him or her to pass along the savings to the purchaser.boY/ The retailer must display the regular price on the label or on a sign or shelf marker.2.2,~/ ~~

There are similar rules governing the use of "economy size'" representations. The sponsor must offer the same brand of the particular food product in at least one other size or labeled form,61l/ one packaged or labeled form of that brand may contain the size" designa~ tion.b72./ The sponsor and all subsequent sellers must sell the product at a price per unit of measuTewhich is substantially (at least five percent)673/ less than the actu~l price of the other packaged units of the same product.~~/ ~

Federal l!o1eat Inspection Act

The definitions of 'olabel" and "labeling"' in the Federal Heat Inspection Act are virtually the same as those found in the Federal Food, Drug, and Cosmetic Actof:!J5j The definitions in both acts encompass any of vrritten, , or graphic matter appearing on a food eontainer m: package, Since meat must be inspected before marketing, there are additional packaging and labeling regulations governing it.

A container or package may not bear an official legend or mark unless the meat has been inspected under the supervision of USDA employees.676/ The process of marking inspected meat is closely regulated; the regulations even specify the colors and types of ink to be used.677/ For most official markings, the Administrator of the Food Safety and Quality Service must approve the size and style of lettering.~/

JVleat labeling regulations on the concept of the principal In this respect, are similar to the 111ore general labeling regulations of , Drug, and

30

Cosmetic Act and the Fair Packaging and Labeling Act.6BO/ As in the case of those regulations, the name of the product must appear on the principal display pane1.681/ If the product consists of two or more ingredients, each must appear on the panel.682/ The co~n or usual names of ingredients must be listed in descending order of predominance.683/ The display panel must also list name and place of business of the manufacturer, packer, or distributor.684/ In addition, the official inspection legend and the number of the official establishment~st be included.685/

As with other foods, the Act requires an accurate statement of the net quantity of the contents of the package or container.6B6/ The quantity may appear either in terms of "net weight" or "net contents."687/ Reasonable variations due to loss or gain of moisture during good manufacturing and distributing practices are permitted.6BB/

Poultry Products Labeling

The container of any poultry product passing inspection must be labeled before leaving the plant.6B9/ Certain information must appear on the principal display panel,690/ which is defined here as it is for the labeling of meat 691/ and for foods governed by the l~ling regulations of the Federal Food, Drug, and Cosmetic Act.692/ Similarly, there are very specific rules here that determine where to locate the principal display panel on any given size or shape of container.693/ The regulations even state the size of the display panel relative to the total surface area of the produce container.694/

The name of the p.oultry product must appear on the label.695/ Poultry products containing light and dark chicken or turkey meat in quantities other than their natural proportions must state this fact.696/ Boneless poultry products must describe their actual form and composition.697/ If the product is cooked, this information must also appear.698/ ---

If the poultry product is made from two or more ingredients, the label must contain a statement of the ingredients 699/ under their common or usual names in order of their descending proportions. Spices, flavorings, and colorings may be listed as such.700/ However, if artificial flavorings or colorings are used, the label must contain a separate statement indicating this fact.~/ The con­tainers of poultry products bearing any chemical preservative must bear a label naming the additive and the purpose for its use.702/

The net quantity (weight, measure, or count) must appear on the label.703/ If a package con­tains both poultry and nonpoultry products, the net weight may be the total net weight of both pro­ducts.704/ The type size used to print the net quantity statement for poultry products is regulated, as it is for other food products.705/ The rules allow reasonable variations from the stated net weight due to gain or loss of moi~re during good manufacturing and distribution practices.706/

Random-weight packages 707/ may be used, but the net weight, price per pound, and total price must be indicated.708/ A package may state that it contains a certain number of servings if it indicates the quantity per serving.709/

The label must include the name and address of the manufacturer, packer, or distributor.710/ If the food is not manufactured by the firm whose name appears on the label, the label must r~al the connection the listed firm has with the product's packing or distribution.711/ The official U.S. inspection legend and the official establishment number must be stamped or printed on poultry products which have passed inspection.712/

Special dietary regulations apply for poultry, just as for other foods. If a poultry product purports to be for any special di~tary use, the label must state its vitamin, mineral, and other dietary properties.713/ Furthermore, the label must comply with any additional dietary regulations of the Federal Food:-Drug, and Cosmetic Act.714/

31

Notes to Chapter 2

1. 21 u.s.c. §§#301-392 (1976).

2. 2 u.s.c. §#301 (1976).

3. 21 u.s.c. §§#321-32l(c) (1976).

4. 21 u.s.c. §#32l(f) (1976).

5. 21 u.s.c. §#32l(r) (1976).

6. 21 u.s.c. §§#331-337 (1976).

7. 21 u.s.c. §#~32 (1976).

~. 21 u.s.c. §#334 (1976).

9. As is evident from its title the Act regulates drugs and cosmetics as well as food. Many'of the Act's provisions pertain to all three categories of consumer products. Here, any provision is examined only insofar as it relates to food, even though it may also regulate drugs and cosmetics.

10. 21 u.s.c. §§#341-350(a) (1976).

11. 21 U.S.C. §§#351-36Uk (1976).

12. 21 u.s.c. §§#361-363 (1976).

13. 21 u.s.c. §#341 (1976).

14. 21 u.s.c. §§#371-3799a) (1976).

15. 21 u.s.c. §#371 (1976).

16. 21 u.s.c. §#372 (1976).

17. Id.

18. 21 u.s.c. §#3~1 (1976).

19. 21 u.s.c. §§#391-392 (1976).

20. 21 u.s.c. §#391 (1976).

21. Act of June 25, 1938, ch. 675 §#902, 52 Stat. 1U4U, 1U59.

22. Act of June 30, 1906, 34 Stat. 768 (repealed 1938).

23. 21 u.s.c. §#32l(f) (1976).

24. 21 u.s.c. §#321(r) (1976).

25. 21 u.s.c. § #33l(b) (1976).

26. 21 u.s.c. § #33l(a) (1976).

27. 21 U.S.C. § #33l(c) (1976).

28. 21 u.s.c. § #33l(g) (1976).

32

29. 21 u.s.c. § lt332 (a) (1976).

30. 21 u.s.c. § //332(a)(l) (1976).

31. 21 u.s.c. § l/343,333(a) & (b) (1976).

32. 21 u.s.c. § //342 (1976).

33. 21 u.s.c. § //342(a)(l) (1976).

34. I d.

35. The addition of any deleterious substance is prohibited (above a certain tolerance level in some instances), but specific prohibitions are established by the Act for four categories of substances, See infra notes 21-34, and accompanying text.

36. 21 u.s.c. § l/342(a)(2) (1976).

37. 21 u.s.c. § 346 (1976).

38. I d.

39. I d.

40. I d.

41. Id.

42. Id.

43. 21 u.s.c. § l/342(a)(l) (1976).

44. Id.

45. 21 u.s.c. § //346a (1976).

46. 21 u.s.c. § i/346a(a) (1976).

47. 21 u.s.c. § 11346a(b) (1976).

48. I d.

49. 7 u.s.c. §§ 135-135k (1976).

so. 21 u.s.c. § l/346a(d)(l)(j) (1976).

51. 21 u.s.c. § /J346a(e) (1976).

52. 21 u.s.c. § l/346a(m) (1976).

53. 21 u.s.c. § 1/348 (1976).

54. 21 u.s.c. § l/321(s) (1976).

55. 39 Fed. Reg. 42, 745 (1974).

56. 21 u.s.c. § l/348(b)(1) (1976).

57. 21 u.s.c. § l/348(d) (1976).

58. 21 u.s.c. § 1/348(h) (1976).

59. 39 Fed. Reg. 42, 745 (1974).

33

60. I d.

6L 21 u.s.c. § lt342 (a)( 3) (1976).

62. 21 u.s.c. § l/342(a)(4) (1976)'

63. 21 u.s.c. § #342(e) (1976).

64. 21 u.s.c. § #342(a)(S) (1976).

65. 21 u.s.c. & lt342(a)(6) (1976).

66. 21 u.s. c. § tf342(b) (1976).

67. 21 lJ.S.C. § li'3L:3(a)(l) (1976).

6b. 21 u.s. c. § 1/350 (1976).

69. n u.s.c. § /1343(a)(2) (1976) 0 In regard to dietary foods, the label must bear information concerning its vitamin, mineral, and other in order to fully inform purcha-sers as to its value for such uses., u.s.c. §

10. 21 us.c. § Bn(b) (1976).

72. 21 u.s.c. § #343(£) (1976).

73. 21 u.s •• § l1343(e) (1976). There is a proviso here allowing reasonable variations from the requirement of quantity designation, according to the Secretary's regulations,

74. 21 U.S.Co § lf343(d) (1976). foods with color additives. 21 u,s,c, § -11376 (1976),

7 5. 21 u.s, . § tt31+ 3 ),

76, I d.

77. 21 u.s.c. ~ lt343 ( (1976),

78. 21 u.s,c, § lf3£f3 (1976).

79. A raw agricultural is defined as any food in its rmv or natural states including all fruits that are ,,mshed, colored, or otherwise treated in their unpeeled form prior to marketing, 21 U.S,C. § l/321(r) (1976),

80, 21 u.s.c, § #343( (1976 '

8L Ido

82. Interestingly, the applicable definition for margarine or oleomargarine is not provided in this Act, but rather· in the Federal Trade Commission Act. 15 U"S.C. § 1t55(f) (1976). The defini~ tion in the latter act applies to both acts, and is as follows: "(1) all substances, mix-

83.

84.

85o

86,

tures, and knm•m as oleomargarine m:: margarine; (2) all substances, mixtures, and compounds which have a consistence similar to that of butter and which contain any edible oils or fats other than milk fat if made in imitation or semblance of butter."

21 u.s.c" § 1f.347(a) (1976)$

21 u.s.c. § ft34 7 ( ( (1976).

21 u,s,c. § 1134.7 (2) (1976).

21 u,s.c. § 1i3Lf 7 ( (3 (1976).

87. 21 u.s.c. § #347(b) (1976).

88. 21 u.s.c. § #341 (1976).

89. Id. One Congressman described this authorization as "the most important economic provision in the bill" for the purpose of maintaining the integrity of food products and giving consumers meaningful knowledge of the value of the products. ~. Goodrich, Food Standarization: Past, Present and Future, 24 Food Drug Cosm. L.J., 464, 466 (1969).

90. 21 u.s.c. § #341 (1976). The Act permits only regulations governing maturity and the effects of freezing for these four items. Id.

91. Food identities, established by the Food and Drug Administration, are found at 21 C.F.R. §§ 130.3-129 (1981).

92. ~ 21 C.F.R. § 130.8 (1981).

-93. 21 u.s.c. § #343(g) (1976).

94. For a criticism of this approach to food standardization, ~ Merill & Collier, Like Mother Used to Make: An Analysis of FDA Food Standards of Identity, 74 Colum. L. Rev. 561 (1974).

95. 21 u.s.c. § 343(g) (1976).

96. 21 C.F.R. § 343(g) (1976).

97. 21 C.F.R. § 145.125(a) (1981).

98. 21 C.F.R. § 155.130(a) (1981).

99. 21 C.F.R. § 145.125(a) (1981).

100. w. Thomas, Cases and Materials on Food and Drug Law: A Study in Consumer Legislation, 186 (1966).

101. See 21 C.F.R. § 103 (1981).

102. Id.

103. 21 u.s.c. § 343(d) (1976).

104. 21 u.s.c. § 343(h)(2) (1976).

105. 21 u.s.c. § 341 (1976).

106. Id.

107. See, e.g., 21 C.F.R. § 145.135 (c) (1981).

108. 21 C.F.R. § 130.12(a) (1981).

109. The Federal Food, Drug, and Cosmetic Act in 1938, ch. 675, § 902(a), 52 Stat. 1040, 1059.

110. Act of June 22, 1934, ch. 712, 48 Stat. 1204, as amended by Act of August 27, 1935, ch. 739, 49 Stat. 871.

111. 21 u.s.c. § #372a (1976).

112. Id.

113. Id.

114. Pub. L. No. 85-296, 72 Stat. 1784. (1958) (codified as amended at 21 u.s.c. §§ 321, 331, 342, 346, 348 (1976).

35

115. The term "additive" is defined at 21 u.s.c. § 32l(s) (1976), and is not synonymous with the more general term "added substance."

116. 21 u.s.c. § 34~(c)(3)(A) (1976).

117. 21 U.S.C. § 34b(a) (1976). The procedure for adoption of food additive regulations is detailed at 21 u.s.c. § 348(b)-(h) (1976).

11~. 21 u.s.c. § 348(b)(l) (1976).

119. the Anticancer Clause of the Food Dru , and Cosmetic Act, 44 U. Chi. L.

1l0. 21 U.S.C. § 348(c)(3) (A) (1976).

121. Id.

122. Id.

1l3. 21 u.s.c. § 346 (1976).

124. 42 Fed. Reg. 19996 (1977).

125. Act of Nov. 23, 1977, Pub.L.No. 95-203, 91 Stat. 1451.

126. See, e.g., Henteleff, The Delaney Myths, 33 Food Drug Cosm. L.J. 396 (197~).

127. Pub. L. No. 90-399, 82 Stat. 342. (1968).

128. 21 u.s.c. § 351 (a)(5) (1976).

129. 21 U.S.C. § 360b(d)(l)(H) (1976).

130. 21 U.S.C. 9§ 360b(l)(H)(ii), 348(c)(3)(A) (1976).

131. 21 U.S.C. § 260b(d)(l)(H)(i) (1976).

132. 38 Fed. Reg. 1045~, 10460 (1973).

133. Id.

134. Act of November 3, 1966, Pub.L.No. 89-755, 80 Stat. 1296, (codified as amended at 15 u.s.c. §§ 1451-1461 (1976).

135. 21 u.s.c. §§ 301-392 (1976).

136. Note Truth-in-Packa in under the Consumer Protection, 6 Colum. J.L.

Act: An Unta ed Source of

137. Sen. Rep. No. 1186, 89th Cong. 2d Sess., reprinted in 1966 U.S. Code Cong. & Ad. News 4069' 4071-72.

138. Id. at 4070.

139. Id.

140. Truth in Pricing: A Proposal for Marking Retail Grocery Offerings to Show Their Price per Measure and Thereby Enable Consumers to Know What They Are Getting for Their Dollar, New York City Department of Consumer Affairs, (1969).

141. Sen. Rep. No. 1186, 89th Cong., 2d Sess., reprinted in 1966 U.S. Code Cong. & Ad. News 4069, 4071.

142. Id.

36

143. 15 v. S.C. § 1451 (1976).

144. Jones v, Rath Packin~~~' 421 U.S. 925 (1977).

1Lf5. Sen. ReE· No. 1186, 89th Cong., 2d Sess., reprinted in 1966 U.S. Code Cong. & Ad. News 4069' 4071.

146. Common carriers for hire, contract carriers for hire, and freight forwarders are excluded. 15 U.S.C. § 1452(a) (1976),

147. Id.

148. 21 u.s.c. §§ 331-337 (1976).

149. See 15 U.S.C. § 1456(a) (1976).

150. 15 u.s.c. § 1~52(b) (1976).

151. 21 u.s.c. § 321(f), -(i) (1976).

152. 15 U.S.C. § 1459(a) (1976).

153. Sen. ~~· 1186, 89th Cong., 2d Sess., reprinted in 1966 U.S. Code Cong. & Ad. News 4069, 4079.

154. 15 U.S.C. § 1459 a)(l)-(5) (1976).

155. 7 u.s.c. §§ 136-136y (1976).

156. 21 u.s.c. §§ 151-157 (1976).

157. 27 u.s.c. §§ 201-212 (1970).

158. 7 u.s.c. §§ 1551-1610 (1976).

159o 15 U,S.C, § 1459(b) (1976),

160. 15 u.s.c. § 1459(b)(l) (1976).

161. For purposes of the Act, "label"' means any written, printed, or graphic matter affixed to any consumer commodity or to the package of any consumer commodity. 15 U.S.C. § 1459(c) (1976).

162. 15 u.s.c. § 1453(a)(l) (1976),

163, "Principal display panel" refers to that part of a label 1>1hich is most likely to be displayed, presented, shown, or examined under normal and customary conditions of display for retail sale. 15 U.S.C. § 1Lf59(f) (1976).

164. 15 u.s.c. § 1453(a)(2) (1976),

165. 15 u.s.c. § 1453(a)(4) (1976).

166. 15 u.s.c. § 1453(a)(3)(A)(i) (1976).

167. Id.

168. 15 U.S.C. § 1453(a)(3)(A)(iii) (1976).

169. Id,

170. 15 U.S,C, § 1453(a)(3)(A)(iv) (1976).

171. Id,

37

172. 15 u.s.c. § 1453(a)(5) (1976).

173. 15 u.s.c. § 1453(a)(3)(A)(ii) (1976).

174. 15 u.s.c. § 1453(b) (1976).

175. g.

176. 15 u.s.c. § 1458(a) (1976).

177. Id.

178. 15 u.s.c. § 1461 (1976).

179. Jones v. Rath Packing Co., 431 u.s. 925 (1977). In this case the state regulations did not make any allowances for reasonable variations from stated weight resulting from loss of moisture in the course of good distribution practices. Since the state standards were more stringent than the federal standards, they were not superseded by the federal regulations.

180. Atlantic Ocean Products, Inc. v. Leth, 292 F.Supp. 615 (D. Ore 1968).

181. Id.

182. 15 u.s.c. § 1460 (1976).

183. ~· 184. 0£· cit.

185. Ibid.

186. Jones v. Rath Packing, 451 u.s. 555 (1979).

187. 21 u.s.c. § 343(e) (1976).

188. 15 u.s.c. § 1454(a) (1976).

189. 15 u.s.c. § 1454(d) (1976).

190. Id.

191. 15 u.s.c. § 272 (1976).

192. 15 u.s.c. § 1454(d) (1976).

193. 15 u.s.c. § 1454(e) (1976).

194. 15 u.s.c. § 1456(c) (1976).

195. ~ 21 u.s.c. § 38(a) and (b) (1976).

196. 15 u.s.c. §§ 1471-1476 (1976).

197. The term "hazardous substance" is defined in the Federal Hazardous Substances Act, 15 U.S.C. § 126l(f) (1976).

198. 15 u.s.c. § 1471(2) (Supp. 1978). Until recently, pesticides were included within the definition of household substances. Pesticides were deleted by the amendment of May 11, 1976, Pub.L.No. 94-294, § 3(a), 90 Stat. 503.

199. 15 U.S.C. § 1471(2)(B) (1976). Pub.L.No. (1) articles used for food or drink for man or other animals, (2) chewing gum, and (3) articles used for components of any such article. 21 u.s.c. § 32l(f) (1976).

38

200. Defined at 15 U.S.C. § 1471(4) (1976).

201. 15 u.s.c. § 1472(a) (1976).

202. 15 u.s.c. § 1476 (Supp. II 1978),

203. Act of December 30, 1970, Publ. L. No. 91-601, 84 Stat. 1670.

204. 15 u.s.c. § 2079(a) (1976).

205. 15 u.s.c. § 1472(a) (1976).

206. 15 u.s.c. § 1472(b) (2) (1976).

207. 15 u.s. c. § 1472(b) (3) (1976).

208. 15 u.s.c. § 1475 (1976).

209. Act of December 15, 1967, Pub. L. No. 90-201, 81 Stat. 548,(codified as amended at 21 U.S.C. §§ 601-695 (1976)j. Section 1 of Pub. L. No. 90-201 states that the provisions of the original 1907 Act, now amended and reclassified as Chapters I-IV (21 U.S.C. §§ 601-680 (1976)) of the current act are to be designated as the "Federal Meat Inspection Act."

210. 21 u.s.c. § 671 (1976).

211. 21 u.s.c. § 602 (1976),

212. I d.

213. IdQ

214. ld, Congress also determined that the sale of meat and meat products affects interstate com­merce, and that regulation by the Secretary of Agriculture, with the cooperation of state authorities, is an appropriate means of regulating this commerce. Id.

215. 21 u.s.c. § 603 (1976).

216.

217. Id.

218. 21 U.S.C. § 604 (1976). The fact that the phrase "capable of use as human food" is employed here means that the Agriculture Department's burden of proof is eased somewhat. The Department need not prove that the intended use of the food was human consumption, but only that it is capable of being used for that purpose.

219. Id,

220. ll·

221. Id. The meat inspection acts confer a contj_nuing power of inspection upon the Secretary of Agriculture j,<Jhich is not exhausted by the first exercise. Bro,ugham v. Blanton Man~facturing; ~. 249 u.s. 495 (1919),

222. 21 U.S.C. § 607 (a) (1976).

223. ld,

224. 21 u~s.c, § 611 (1976).

225. 21 u.s.c. § 608 (1976),

226. Hereinafter referred to as "the Secretary."

39

227. 21 u.s.c. § 608 (1976).

228. 21 u.s.c. § 610(b) (2) (1976). The Supreme Court has determined that it is within the power of Congress to require meat food products to be inspected and passed as a condition to interstate or foreign shipment. Pittsburg Melting Co. v. Toten, 248 U.S. 1 (1918).

229. 21 u.s.c. § 610(c) (1976).

230. 21 u.s.c. § 60l(m)(l) (1976). In the case of a substance which is not an added substance but rather is naturally present in the food, the article will not be considered adulterated if the quantity present does not ordinarily render it injurious to health. Id.

231. 21 U.SwCo § 60l(m)(4) (1976).

232. 21 u.s.c. § 60l(m)(3) (1976).

233. 21 u.s.c. § &Ol(m)(6) (1976).

234. 21 u.s.c. § 607(c)(2) (1976).

235. 21 u.s.c. § 321 (1976).

236. 21 u.s.c. § 607(c)(2) (1976).

237. See infra notes 53-58 and accompanying text for the discussion of state and federal cooperation in the enforcement of meat inspection laws.

238. 21 u.s.c. § 607(c)(2) (1976).

239. 21 u.s.c. § 623(a) (1976).

240. 21 U.S.C. § 623(c) (1976).

241. 21 u.s.c. § 623(a) (1976).

242.21 u.s.c. § 612 (1976).

243. 21 u.s.c. § 613 (1976).

244. 21 u.s.c. § 614 (1976).

245. 21 u.s.c. § 615 (1976).

246. 21 u.s.c. § 616 (1976).

247. 21 u.s.c. § 617 (1976).

248.Id.

249. 21 u.s.c. § 620 (1976).

250. 21 u.s.c. § 301-392 (1976).

251. 21 u.s.c. § 620(a) (1976).

·252. Id.

253. Id.

254. 21 u.s.c. § 620(b) (1976).

255. Id.

256. 21 u.s.c. § 66l(a) (1976).

40

257. As used in this part of the Act, the term "state" means any state or original territory, 21 u.s.c. § 661(d) (1976).

258. 21 u.s.c. § 66l(a)(l) (1976).

259. 21 u.s.c. § 66l(a)(3) (1976).

260. Id.

261. Id.

262. 21 u.s.c. § 66l(c)(3) (1976).

263. Id. -264. 21 u.s.c. § 26l(c)(l) (1976).

265. Id.

266. 21 u.s.c. § 261 (c)(3) (1976).

267. g.

268. 21 u.s.c. § 451-470 (1976).

269. 21 u.s.c. § 451 (1976).

270. 21 u.s.c. § 452 (1976).

271. "Poultry" includes any domesticated bird, whether alive or dead. 21 u.s.c. § 453(e) (1976).

272. This Act, like the Federal Meat Inspection Act, is administered by the Secretary of Agriculture. 21 U.S.C. § 453(1). The term "Secretary" will be used when referring to the Secretary of Agriculture or his representatives.

273. 21 u.s.c. § 455(a) (1976).

274. 21 u.s.c. § 455(b) (1976).

275. Id.

276. The term "adulterated" is defined at 21 u.s.c. § 453(g) (1976).

277. 21 u.s.c. § 455(c) (1976).

278. Id.

279. Id.

280. Id.

281. Id.

282. 21 u.s.c. § 456(a) (1976).

283. 21 u.s.c. § 456(b) (1976).

284. Defined as any individual, partnership, corporation, association, or other business unit. 21 u.s.c. § 453(j) (1976).

285. 21 u.s.c. § 458(a)(2)(B) (1976).

286. 21 u.s.c. § 458(a)(2)(A) (1976).

41

287. 21 u.s.c. § 458(a)(3) (1976).

288. 21 u.s.c. § 453(g)(l) (1976).

289. 21 u.s.c. & 453(g)(2) (1976).

290. 21 u.s.c. § 453(g)(C) (1976).

291. 21 u.s.c. § 453(g)(D) (1976).

292. See, 21 u.s.c. § 32l(s) and (t) (1976).

293. 21 u.s.c. § 453(g)(3) (1976).

294. 21 u.s.c. § 453(g)(4) (1976).

295. 21 u.s.c. § 453(g)(5) (1976).

296. 21 u.s.c. § 453(g)(6) (1976).

297. 21 u.s.c. § 453(g)(7) (1976).

298. 21 u.s.c. § 453(g)(8) (1976).

299. 21 u.s.c. § 453(h)(l), (2), (3), (4) and (6) (1976).

300. 21 u.s.c. § 453(h) (5 )(A) (1976).

301. 21 u.s.c. § 453(h)(5)(B) (1976).

302. 21 u.s.c. § 453(h)(l) (1976). If compliance with this provision is impractical, the Secretary may establish exceptions.

303. 21 u.s.c. § 453(h)(l0) (1976).

304. 21 u.s.c. § 457(b)(2) (1976).

305. 21 u.s.c. § 457(b) (1976).

306. 21 u.s.c. § 453(h)(7)(B) (1976).

307. 21 u.s.c. § 453(h)(8) (1976).

308. 21 u.s.c. § 464 (1976).

309. 21 u.s.c. § 464(a)(l) (1976).

310. 21 u.s.c. § 464(a)(3) (1976).

311. 21 u.s.c. § 464(c)(l)(A) (1976). The poultry may also be consumed by members of the person's household, guests, and employees. ~·

312. 21 u.s.c. § 464(c)(l)(B) (1976).

313. 21 u.s.c. § 464(c)(2) (1976).

314. 21 u.s.c. § 454 (1976).

315. 21 l.s.c. § 661 (1976). See supra pp. 50-52.

316. H.R.#Rep. No. 1333, 90th Cong., 2d Sess., reprinted in 1968 U.S. Code Cong.& Ad. News 3426, 3427.

3i7. Id.

42

3ll:i. 21 u.s.c. § 454(a)( ) (1976).

319. I d.

320. 21 u.s.c. § 454(c) (1976).

321. 21 u.s.c. § 66(c) (1976).

32.2. 278 F. Supp. 822 (N.D.F1a. 1968).

323. I d. at 826,

324, Pacific Meat Co. v. Otagak, 47 Hawaii, 65, 394 P. 2d 618 (1964).

325. Id.

326, Act of Dec. 29, 1970, Pub. L. No. 91-597, 84 Stat. 1620, [codified as amended at 21 U.S.C. §§ 1031-1056'(1976).]

327. 21 u.s.c. §§ 301-392 (1976).

328. 21 u.s.c. §§ 601-695 (1976).

329. 21 u.s.c. § 451-469 (1976).

330. 21 u.s.c. § 1031 (1976).

331. H.R. Rep. No. 91-1670, 9lst Cong., 2d. sess., renrinted in 1970 U.S. Code Cong. & Ad. News 5242, 524 •

332. I d.

333. Id. at 5244.

334. I d.

335. 21 u.s.c. § 1034 (1976).

336. 21 u.s.c. § 1034(d) (1976).

337. 21 u.s.c. § 1052(c) (1976).

338. Hereinafter referred to simply as "the Secretary. "

339. The term "egg product" means any dried, frozen, or liquid eggs, with or without added ingre­dients, excepting products which contains eggs only in a relatively small proportion. 21 U.S.C. § 1033(f) (1976). Only the eggs of chickens, turkeys, ducks, geese, or guineas fall under the Act. 21 u.s.c. § 103 (g) (1976).

340. 21 u.s. § 1034(a) (1976).

341. 21 u.s.c. § 1034(b) (1976).

342. The definition of adulteration in this act is similar to the definition found in the Federal Meat Inspection Act. Compare 21 u.s.c. § 1033(a) (1976) lr7ith 21 u.s.c. § 60l(m) (1976) and 21 u.s.c. § 453(g) (1976).

343. 21 u.s.c. § 1034(c) (1976).

344. I d.

345. 21 u.s.c. § 1036(a) (1976).

346. 21 u.s.c. § 1037(d)(l) and (2) (1976).

43

347. 21 u.s.c. § 1037(d)(7) (1976).

348. 21 u.s.c. § 104l(a) (1976).

349. 21 u.s.c. § 1036(b) (1976).

350. Id.

351. Id.

352. 21 u.s.c. § 1044 (1976).

353. 21 u.s.c. § 1044(a)(3) (1976).

354. 21 u.s.c. § 1044(a)(7) (1976).

355. 21 u.s.c. § ~039 (1976).

356. Id.

357. 21 u.s.c. § 1046(a) (1976).

358. Id.

359. Id.

360. Id.

361. 21 U.S.G. § 1046(b) (1976).

362. !£• All charges for storage, cartage, and labor with respect to any imported articles not in compliance with the Act must be paid by the owner or consignee of the articles. 21 u.s.c. § 1046(c) (1976).

363. 21 u.s.c. § 1038 (1976).

364. Id.

365. 21 u.s.c. § 1052(a) (1976j.

366. Section 1040 of the Act authorizes the Secretary to establish recordkeeping requirements for any individual or firm engaged in the business of transporting, shipping, or receiving eggs or egg products. Compare 21 u.s.c. § 1052(a) (1976).

367. 21 u.s.c. § 1052(a) (1976).

368. 21 u.s.c. § 1052(b) (1976).

369. 7 u.s.c. §§ 136-136y (1976).

370. ~ supra. PP• 23-24.

371. 21 u.s.c. §§ 301-392 (1976).

372. 21 u.s.c. § 346(a) (1976).

373. The term "pesticide" means (1) any substance or mixture of substances intended for preventing, destroying, repelling, or mitigating any pest, or (2) any substance or mixture of substances intended for use as a plant regulator, defoliant, or desiccant. 7 u.s.c. § 136(u) (1976). It does not include any "new animal drug" (21 u.s.c. § 32l(w) (1976)) or animal feed (21 u.s.c. § 32l(x) (1976)) within the meaning of the Federal Food, Drug, and Cosmetic Act. !£•

3~4. Environmental Defense Fund, Inc. v. Hardin, 428 F. 2d 1093 (D.C. Cir. 1970).

44

l

375. S. Bloom & s. Degler, Pesticides and Pollution, 41 (1969).

376. Act of June 25, 1947, ch. 125, 61 Stat. 163, (codified as amended, at 7 u.s.c. 135-135k (1970)). The original act was completely revised and redesignated 7 u.s.c. §§ 136-136y, as part of the Federal Environmental Control Act of 1972. Act of October 21, 1972, Pub. L. No. 92-516, b6 Stat. 973. The original act and the pre-1972 amendments were granted temporary con­tinuing application while the new act and its regulations were implemented; that temporary grant of authority has now expired. Act of October 21, 1972, Pub. L. No. 92-516, § 4(b), 86 Stat. 998, as amended by Act of Nov. 28, 1975, Pub. L. No. 94-140, § 4(b), 89 Stat., superseded by sections 136 to 136(y) of that title.

277. Act of October 21, 1972, Pub. L. No. 92-516, 86 Stat. 973.

378. 7 u.s .·c. § 136a(a) (1976).

379. 7 u.s. c. § 136a(d)(l) (1976).

380. 7 u.s.c. § 136a(d)(l)(B) (1976).

381. 7 u.s.c. § 136a(d)(l)(C) (1976).

382. 7 u.s.c. § 136a(d)(C) (1976).

383. 7 u.s.c. § 136a(d)(l)(A) (1976).

384. ld.

385. The title "Administrator" refers to the Administrator of the EPA.

386. A "registrant" is any person who has registered a pesticide pursuant to the provisions of the Act. 7 U.S.C. § 136(y) (1976).

387. 7 u.s.c. § 136d(a) (1976).

388. ld.

389.7 u.s.c. § 136d(b)(l) (1976).

390. 7 u.s.c. § 136d(b)(2) (1976).

391. 7 u.s.c. § 136d(b) (1976).

392. g.

393. I d.

394. 7 u.s.c. S 136d(c) (1976).

395. The terJII "imminent hazard" means a situation which exists when the continued use of a pesti­cide, during the time required for a cancellation proceeding, would be likely to result in unreasonable adverse effects on the environment or will involve unreasonable hazards to the survival of an endangered or threatened species. 7 u.s.c. § 136d(l) (1976).

396. 7 u.s.c. § 136d(c)(l) (1976) •

. 397. Id.

398. 7 u.s.c. § 136d(c)(2) (1976).

399. 7 U.S.C. § 136d(c)(3) (1976).

400. 7 u.s.c. § 136d(c)(3) (1976).

45

40L Environmental Defense Fund, Inc. v. Environmental Protection A_gen~, 548 F. 2d 998 (D.C. crr:-r976')'7___ ~-----------· - --

402. 7 u.s. c. § l36e (1976).

403. 7 U@S~C~ § 136e(c) (1976).

404. 7 u.s.c. § a) (1976) 0

405. 7 u,s,c. § l36k(a) (1976).

tf06. 7 u.s. c. § 136k(b) (1976).

407. 7 u.s. c. ~ l361(b) ).

Lf01:i, 7 u.s. c. § l36l(a) (1976),

409. 7 u.,s~c~ § l36l(b) (1976).

410. 21 U.S.C. §§ 61-·M (1976). The Filled Milk Act is enforced by the Secretary of Health. 21 u.s.c. § 64 (1976).

41L 21 u.s.c, § 62 (1976).

412. 21 U.S.C. § 6l(c) (1976), This definition excludes certain food compounds designed for feeding infants or young children and not likely to be mistaken in taste for milk or cream, ld,

413. 21 U.SoC, § 62 (1976).

414. Act of i'1arch £,, 1923, ch. 262, L12 Stat. 1486,

415. 304 u.s. 144 (1938).

416. 323 u.s. 18 (1944),

Ld7. !J~ C~l!~~t§>., 51 F. Supp. 675 affd, 323 U.S. 18 (1944),

, 140 F. 2d 61 (4th Cir.),

418. ~Co~~~-Richa~~~~ 350 F. Supp. 221 (S.D. Ill. 1972).

419, Id. at 225.

420, The Filled Cheese Act was codified at 26 U.S.C. §§ 4831~4834, 4-836, 48Lfl, £,8£12, and 4846 ( ; the Adulterated and Process or Renovated Butter Act was codified at 26 U.S.C. §§ 4811~4819, 4822, and 4826 (1970),

421. Act of October 26, 1974, Pub. L. No. 93-490, § 3(a)(l), 88 Stat. 1466.

422. Act of October 4, 1976, Pub. L. No. 94-455, § 1904(a)(l7), 90 Stat. 1814.

423. 21 u.s.c. II 301-392 (1976).

424. 15 u.s.c. §§ 1451-1461 (1976).

425. 21 u.s. c. §§ 141-lii-9 (1976)'

426. 21 u.s. c. § 141 (1976).

427. 21 u.s. c. § 1Lf3 (1976),

428. 21 u.s.c. § 142 (1976).

Ll29, 21 U,S,C, § 143 (1976),

46

430. 7 u.s.c. §§ 1621-1627 (1976).

431. 7 u.s.c. § 1622(c) (1976).

432. 21 u.s.c. §§ 301-392 (1976).

433. 7 u.s.c. § 1625 (1976).

434. 7 u.s.c. § 1621 (1976).

435. Sen Rep. No. 1843, 79th Gong., 2d. Sess., re2rinted in 1946 u.s. Code Gong. & Ad. News 1584.

436. 7 u.s.c. § 1622(c)

437. 7 C.F.R. Part 2851 (1981).

438. 7 C.F.R. Part 2852 (1981).

439. 7 C.F.R. Part 2853 (1981).

440. 7 C.F.R. Part 2870 (1981).

441. 7 C.F.R. Part 2870 (1981).

442. 7 C.F.R. Part 2855 (1981).

443. 7 C.F.R. Part 2856 (1981).

444. 7 C.F.R. Part 2828 (1981).

445. For example, standards for grain are promulgated under the U.S. Grain Standards Act. 7 U.S.C. §§ 71-87h (1976). Special export standards have been adopted for apples and pears (7 u.s.c. §§ 581-590 (1976) as well as grapes and plums (7 U.s.c. §§ 591-599 (1976). These standards and their corresponding statutes are discussed separately ~·

446. See, e.g., 7 C.F.R. Parts 2851-58, 70 (1981).

447. 7 C.F.R. §§ 2851.340-2851.342 (1981).

448. 7 C.F.R. §§ 2851.300-2851.304 (1981).

449. 7 C.F.R. §§ 2851.750-2851.759 (1981).

450. 7 C.F.R. § 2851.521 (1981).

451. 7 C.F.R. § 2853.4 (1981).

452. 7 C.F.R. § 2853.112-2853.137 (1981).

453. 7 C.F.R. § 2853.5 (1981).

454. 261 F.Supp. 622 (D.Ore. 1966).

455. Maine Potato Growers, Inc. v. Butz, 54U F. 2d 518 (lst Cir. 1976).

456. 7 u.s.c. § 1621 (1976).

457. 7 u.s.c. § 1624 (1976).

458. Id.

459. Id.

47

460. 514 F 2d 272 (D.C.Cir. 1975).

461. 7 u.s.c. §§ 71-~7h (1976).

462. Act of August 11, 1916, ch. 313, 39 Stat. 482.

463. Act of August 15, 1968, Pub. L. No. 90-4~7, 82 Stat. 761.

464. Act of Oct. 21, 1976, Pub. L. No. 94-582, 90 Stat. 2867.

465. Act of Sept. 29, 1977, Pub. L. No. 95-113, 91 Stat. 1025.

466. 7 u.s.c. § 74 (1976).

467. Id.

468. 7 u.s.c. § 75a (1976).

469. Id.

470. Id.

471. 7 u.s.c. § 76(a) (1976).

472. 7 u.s.c. § 76(a)(l) (1976). The current grain standards are promulgated through the Agricultural Marketing Service and are found at 7 C.F.R. Part 26 (1981).

473. 7 u.s. c. § 76(a)(2) (1976).

474. 7 u.s.c. § 78(a) (1976).

475. Ha~es Grain Co. v. Rea-Patterson Milling Co., 145 Ark, 65, 22 s.w. 390 (1920).

476. 7 u.s.c. § 78(a) (1976).

477. 7 u.s.c. § 78(b) (1976).

478. 7 C.F.R. Part 26 (1981).

479. 231 F.Supp. 432 (D.Okl. 1964). Accord, Farmers Elevator Mutual Ins. Co. v. Stanford, 280 F.Supp. 523 (D.Tex.), aff'd, 408 F.2d 776 (1967).

480. 7 u.s.c. § 76(a) (1976).

481. 7 u.s.c. § 76(b) (1976).

482. I d.

483. 7 u.s.c. § 77(a)(l) (1976).

484. Id.

485. The term "export port location" means a commonly recognized port of export in the United States or Canada, as determined by the Administrator, from which grain produced in the United States is shipped to any place outside the United States. 7 U.S.C. § 75(w) (1976).

486. 7 u.s.c. § 77(a)(2) (1976).

487. 7 u.s.c. § 77(a)(3) (1976).

488. 7 .s.c. § 77(b) (1976).

489. 7 u.s.c. § 77(a)(l) (1976).

48

49U. The term "Administrator" is used to refer to the Administrator of the Federal Grain Inspection Service or his delegates. 7 u.s.c. § 75(z) (1976).

491. 7 u.s.c. § 77(a) (1) (1976).

492. 7 u.s.c. § 79(e) (2) (1976). ~also 7 u.s.c. § 71(e) (2) (1976).

493. 7 u.s.c. § 79(e)(3) (1976).

494. Id.

495. 7 u.s.c. § 79(e)(2) (1976).

496 • .!J!_.

497. 7 u.s.c. § 79(f) (1976).

498. 7 u.s.c. § 79(f)(l)(A) (1976).

499. 7 u.s.c. § 79(g)(l) (1976).

500. 7 u.s.c. § 79(g)(2) (1976).

501. 7 u.s.c. § 79(g)(3) (1976).

502. I d.

503. 7 u.s.c. § 84 (1976).

504. 7 u.s.c. § 84 (1976).

505. 7 u.s.c. § 84(a)(l) (1976).

506. 7 u.s.c. § 84(a) (1976).

507. 7 u.s.c. § 84(b) (1976).

508. Id.

509 • .!J!.·

510. 7 u.s.c. § 84(c) (1976).

511. 7 C.F.R. § 26.78 (1981).

512. 7 u.s.c. §§ 581-590 (1976).

513. 7 u.s.c. §§ 591-599 (1976).

514. H.R. Rep. No. 2107, 85th Cong., 2d Sess., ·reprinted in 1960 U.S. Code Cong. & Ad. News 3273.

515. 7 u.s.c. §§ 581, 591 (1976).

516. Id.

517. ~· The regulations for apples and pears appear at 7 C.F.R. Part 33 (1981). The corresponding regulations for grapes and plums appear at 7 C.F.R. Part 35 (1981).

518. u.s.c. §§ 583, 593 (1981).

519. Id.

520. 7 u.s.c. §§ 585, 595 (1976).

49

521. 7 u.s.c. §§ 586, 596 (1976).

522. I d.

523. 7 u.s.c. § 594 (1976).

524. 7 u.s.c. § 584 (1976).

525. Act of August 14, 1946, ch. 966, 60 Stat. 10 7.

526. Act of August 8, 1956, ch. 1036, § 6(a), 70 Stat. 1119.

527. Reorg. Plan No. 4 of 1970, § 1, 84 Stat. 2090.

528. 50 C.F.R. § 260 (1981).

529. 50 C.F.R. § 260.96 (1981).

530. 50 C.F.R. § 260 (1981).

531. Act of August 11, 1916, ch. 313, 39 Stat. 486.

532. 7 u.s.c. §§ 241-273 (1976).

533. Greater Baton Rouge Port Comm. v u.s., 287 F.2d 86 (5th Cir.), cert. denied, 368 u.s. 985 (1961).

534. Farmers Elevator Mutual Insurance Co. v. Jewett, 394 F.2nd 896 (lOth Cir. 1968).

535. A "warehouseman" is a person lawfully engaged in the business of storing agricultural products. 7 u.s.c. § 242 (1976).

536. 7 u.s.c. § 244 (1976).

537. 7 u.s.c. § 243 (1976).

538. 7 u.s.c. § 252 (1976).

539. 7 u.s.c. § 244, 252 (1976).

540. 7 u.s.c. § 246 (1976).

541. I d.

542. I d.

543. 7 u.s.c. § 266 (1976).

544. 7 u.s.c. § 247 (1976).

545. I d.

546. 7 u.s.c. § 250 (1976).

547. It should be noted that the Act itself states that any agricultural product stored in a federally licensed warehouse is automatically subject to the terms of the Act and the regula­tions promulgated thereunder. 7 u.s.c. § 255 (1976). This provision means that grain stored in such a warehouse is presumed to be intended for interstate commerce. Girand v. Kimbell Milling Co., 116 F.2nd 999 & 1001 (5th Cir. 1941).

548. 7 u.s.c. § 256 (1976).

549. 7 u.s.c. § 257 (1976).

50

550. 7 u.s.c. §§ 71-87h (1976).

551. 7 u.s.c. § 258 (1976).

552. Id.

553. Id.

554. 7 u.s.c. § 259 (1976).

555. 7 u.s.c. § 260 (1976).

556. Id.

557. Id.

558. 7 u.s.c. § 262 (1976).

559. I d.

560. Id.

561. 7 u.s.c. § 263 (1976).

562. 7 u.s.c. § 268 (1976).

563. 7 C.F.R. Part 101 (1981).

564. 7 C.F.R~ Part 102 (1981).

565. 7 C.F.R. Part 103 (1981).

566. 7 C.F.R. Part 104 (1981).

567. 7 C.F.R. Part 106 (1981).

568. 7 C.F.R. Part 107 (1981).

569. 7 C.F.R. Part 108 (1981).

570. 7 C.F.R. Part 111 (1981).

571. 7 C.F.R. Part 151 (1981).

572. 7 u.s.c. § 264 (1976).

573 • .!.!!·

574. 7 u.s.c. § 265 (1976).

575. 7 u.s.c. § 267 (1976).

576. 7 u.s.c. § 265 (1976).

577 • .!.!!·

578. Act of August 11, 1916, ch. 313, Part C, § 29, 39 Stat. 490.

579. 7 u.s.c. § 269 (1976).

580. Rice v. Santa Fe Elevator Co., 331 U.S. 218 (1947).

5~1. 331 u.s. 218 (1947).

51

582, at 234.

583, Id. at 236-237,

5!:l4. Id.

585. 7 u.s.c. § 269 (1976).

586. I d.

587, 7 u.s.c. § 270 (1976),

588. ld.

589, ~· Additional penalties are also available,

590, 15 u.s,c. § 27-2(a) (1976).

59L 15 U.S.C. §§ 231-242 (1976).

592, Act of August 3 '

1912, ch, 27 3, 37 Stat. 250.

593. 15 u.s.c. § 231 (1976).

59Li. 15 u.s.c. § 23L; {1976).

595. 15 u.s.c. § 232 (1976).

596. 15 U~S~C~ § 235 0976).

597. 15 U~SwC~ § 236 (l

598. Act of October 22, 1978, Pub. L. No, 90-628, § l( , 82 Stat. 1320 repealed 15 u.s.c. §§ 251-256 (l96L.,),

599. 15 u.s.c. §§ 1451-1461 (1976).

602. 15 u.s.c. II 1451-1461 (1976).

603.

604.

605.

606.

607.

601:).

609.

610.

61L

The following provisions of the two acts are roughly equivalent: and 15 U.S.C. § 1453(a) (l) (1976); 21 U.S.C. § 3Lf3(e) (2) (1976) (1976); 21 U.S.C, § 343(f) (1976) and 15 § l453(a) (3) (1976); 21 15 u.s.c. 1454(c) (4) (1976).

15 u.s.c. § l455(a) (1976).

15 u,s.c. § 1455 (1976).

21 C,F.R. Part 101 (1981).

21 COIF~R@ Part l 0 981).

See 15 C,F.R" Part 12 (1981).

21 C.F,R. § 101.1 (1981).

21 C"'FI:>R@ § 101.2(a) (1981).

21 C.F,R. § lOLl (1981).

52

21 u.s.c. § 343(3) (1) (1976) and 15 U.S.C. § 1453(a) ) u.s.c. § 343(d) (1976) and

612. 21 C.F.R. § 101.2(a) (19i.H).

613. 21 C.F.R. § 101.2(b) (1981).

614. 21 C.F.R. § 101.3(b)(2) (1981 ).

615. 21 C.F.R. § 101.3(a) (1981).

616. 21 c.F.c. § 101.3(c) (1981).

617. I d.

618. 21 C.F.R. § 101.3(d) (1981).

619. 21 C.F.R. § 101.1 (1981).

620. 21 C.F.R. § 101.5(a) (1981).

621. 21 C.F.R. § 101.5(b) (1981).

622. 21 C.F.R. § 101.5(c) (1981). Examples of qualifying statements given in the regulation ar·e "Manufactured for or "Distributed by

623. 21 C.F.R. § 101.5(e) (1981).

624. 21 C.F.R. § 101.4(d) (1981).

625. 21 C.F.R. § 101.4(b) (19tH).

626. 21 C.F.R. § 101.22 (1981).

627. 21 u.s. c. § 341 (1976).

628. 21 C.F.R. § 101.6(b) (1981).

629. 21 C.F.R. § 101.6(c) (1981).

630. 21 C.F.R. § 1 • • 6(a) (1981).

631. 21 C.F.R. § 101.8(a) (1981)

632. I d.

633. Id.

634. 21 C.F.R. § 101.9(a) (1981).

635. Id. However, if the only nutritional claim is in regard to sodium content, the special rules do not apply. 1£•

636. 21 c.F.R. § 101.9(a) (1) (1981).

637. The term "serving" means the reasonable quantity of food suited for consumption as part of a meal by an adult male engaged in light physical activity, or by an infant or child under four years of age when the article purports to be for consumption by an infant or child under four years of age.

638. 21 C.F.R. § 101.9(b) (1981).

639. Id.

640. 21 C.F.R. § 101.9(b) (3) (1981).

641. Id.

53

642. 21 C.F.R. § 101.9(c) (3)-(6) (1981).

643. 21 C. F, R. § 101. 9(c) (7) 0981). The U.S. Recommended Daily Allowances for vitamins and minerals are found at 21 C.F.R. 101. 9(c) (7) (iv) (1981).

644. 21 C.F.R, § 101. 9(c) (7) (v) (1981).

645. I d.

046, 21 C. F. R. § lOL 9(h) (l9!H).

647. 21 C.F.R, § lOLY(i) (1981).

64B. 21 C.F.R. ~ lOL9(i) (l) (1981).

649. 2l C.F.R. § lOL9(i) (2) (l9l:!l).

650. 21 C.F.R. § 10L9(i) (6) (1981).

65L I d.

652. 21 C.F.R. § !OL9(i) (1981).

653. 15 C.F,R. Part 12 (1981).

654. 15 u.s.c. § 1454(d) & (e) (1976).

655. 15 C.F,R. § l2.3(a) (1981).

656. 15 C<&F"'R" § 12.l(d) (19!H).

657. 15 C.FoR. § l2.2(a) (l91H).

65!:J. 15 C.F.R. § 12.2(d) & (e) (1981).

659, I d.

660. 15 c.r.R. § 12.3(a) (1981).

66L 15 C.F.R, § 12.l(c)(3) (l91:H ).

662. • .!.£· 663. "Nonfunctional slack~fill" occurs when a package is filled to substantially less than its

capacity for reasons other than the protect:l.on of its contents or the requirements of the machines used for enclosing the contents in the package. 15 U.S.C. § 145LI(c)(4) (1976).

664.

665. 15 u.s.c. § l454(c)(2) (1976),

666. The regular price (or "'ordinary and customary price") is the price at which the product has

667.

668,

669.

67().

been and actively sold in the most recent regular course of business in a particular reta:l.l outlet or trade area for a reasonably substantial period of time (at least 30 days). 21 C.F.R. § 1.35(b)(3) (1981), For products that fluctuate in price, the ordinary and customary price is the lowest price at \vhich any substantial sales were made in the last 30 days. .!.£•

21 C,F.R. § 1.35(a)(l) (1981).

21 C.F.R. § l.35(a)(2) (1981).

21 C.F.R. § l. 35(a)(3) (l9!H).

21 C.F.R, § l.35(b)(l) (191:\l).

54

67L 21 C. FoR, § l.3l(a)(l) (1981).

672. 21 C.F.R, § l.3l(a)(2) (1981).

6 73. 21 C.F.R. § l.3l(a)(3) (1981).

674. I d.

675, Comr..~ 21 u.s.c. § 601(o) & (p) (1976) with 21 u.s. c. § 321(k) (1976).

676. 9 C.F.R. § 316.3(a) (1981).

677. 9 C.F.R. § 316.5 (1981).

678. 9 C.F.R. § 316.7 (1981).

679. 9 C.F.R. § 3H.2(b) (1981).

680. See 21 C.F.R. § 101.1 (1981).

681. 9 C.F.R. § 317 .2(c)(l) (1981)'

682. 9 C.F.R. § 317 .2(c)(2) (1981).

683. 9 C.F.R. § 317 .2{f)(l) (1981).

684. 9 C.F.R. § 317 .2(c)(3) (1981).

685. 9 C. F. R. § 317 .2(c)(5) (1981).

686. 9 C.F.R. § 317.2(c)(4) (1981).

687. 9 C.F.R. § 317 .2(h)(3) (1981).

688. 9 C.F.R. § 317 .2(h)(2) (1981).

689. 9 C.F.R. § 381.115 (1981).

690. 9 C.F. R. § 381.116(b) (1981).

691. 9 C.F.R. § 317.2(b) (1981).

692. 21 C.F.R. § 101.1 (1981).

693. 9 C.F.R. § 38Lll6(b) (1981).

694. 9 C.F.R. § 381.116(b)(2) & (3) (1981).

695. 9 C.F.R. § 381.117(a) (1981).

696. 9 C.F.R. § 381.117 (c) (1981).

697, 9 C.F.R. § 381.117(d) (1981), Boneless poultry products may not have a bone solids content of more than one percent calculated by weight. Ji•

698. Id.

699. 9 C.F.R. § 381.118(a) (1981).

700. 9 C.F.R. § 38Lll8(a) (1981).

701. 9 C.F.R. § 38l.ll9(b) (1981).

702. 9 C.F.R. § 381.120 (1981).

55

703. 9 C.F.R. § 381.12l(a) (1981).

704. 9 C.F.R. § 381.12l(b) (1981).

705. 9 C.F.R. § 381.12l(c)(3) (1981). Compare this regulation with 21 C.F.R. § 101.15 (1981) (Food and Drug Administration Regulations) and 9 C.F.R. § 316.7 (1981) (labeling regulations for meat.)

706. 9 C.F.R. § 381.12l(c)(6) (1981).

707. A random weight package is one of a lot, shipment, or delivery of packages of the same product with varying weights and with no fixed weight patterns 9 C.F.R. § 381.12l(c)(9) (1981).

708. Id.

709. 9 C.F.R. § 381.12l(c)(7) (1981).

710. 9 C.F.R § 38!.122 (1981).

711. Id.

712. 9 C.F.R. § 381.123(a) and (b) (1981).

713. 9 C.F.R. § 381.124 (1981).

714. I&• The regulations referred to are found at 21 C.F.R. Part 125 (1981).

56

Chapter 3

PRODUCER-ORIENTED MARKET REGULATION

Packers and Stockyards Act

Since its enactment in 1921,!/ the Packers and Stockyards Act ~/ has regulated meat packers, stockyards and stockyard dealers, and live poultry dealers and handlers. Shortly after passage, its constitutionality was challenged and upheld by the Supreme Court in Stafford v. Wallace.l/

In a subsequent case,4/ the Supreme Court stated that the dominant purpose of the Act is to make sure that stockyard patrons can obtain services at fair and reasonable rates. The lower federal courts have delineated other purposes of the Act: to stabilize and encourage livestock pro­duction by building confidence in the financial stability of dealers,S/ to maintain free and open competition among buyers,6/ to insure the proper handling of a shipper's funds and their proper transmission to the shipp;r,7/ to protect consumers by regulating stockyards in a manner similar to public utilities,8/ and to protect producers and consumers of poultry against certain deleterious practices of middlemen.!/

The Act empowers the Secretary of Agriculture to regulate the business of public stockyards and their market agencies. This power has been construed as encompassing all of the material incidents and relationships of the marketing process.lO/ Since the Packers and Stockyards Act is remedial legislation, courts have reasoned that it should be liberally construed.!!/

A packer, for the purposes of this act, is any person who (1) buys livestock in commerce for the purpose of slaughter, (2) manufactures or prepares meat or meat food products for s~le or ship­ment in commerce, or (3) markets meats or meat food products in an un manufactured form, acting as a wholesale dealer, broker, or distributor in commerce.l2/ A stockyard is defined as any place, establishment, or facility conducted or managed for profit or nonprofit as a public market for livestock producers, feeders, market agencies, and buyers, and consisting of pens in which cattle, sheep, swine, horses, mules, or goats are received and held for sale or shipment in commerce. 13/ The Secretary of Agriculture is allowed to determine what is considered a stockyard under the -­Act,l4/ and must give notice to the public and to the facility's owners 15/ when he determines that a pa~icular establishment is a federally regulated stockyard.l6/ --

General Prohibitions

The Act includes sections which prohibit certain kinds of conduct by pakcers and live poultry dealers lll including:!!/ (1) engaging in any unfair, unjustly discriminatory, or deceptive prac­tice, (2) giving unreasonable preference or advantage to any person or locality, (3) subjecting any particular person or locality to any unreasonable prejudice or disadvantage, (4) selling or transferring any article to another packer or poultry dealer for the purpose of apportioning the supply of that article and creating a restraint on commerce or a monopoly, (5) selling or trans­ferring any article for the purpose of manipulating or controlling prices, or (6) engaging in any course of business for the purpose of manipulating prices or creating a monopoly.

A conspiracy, combination, or agreement with others to engage in any of the proscribed activi­ties also violates the Act,l9/ as do conspiracies or agreements to apportion territory, manipulate prices, or apportion purchases or sales of any article.20/

The responsibility for enforcement lies with the Secretary of Agriculture.~/ The provisions do not, however, give the Secretary the power to directly regulate prices, discounts, or sales methods,~/ or create any private right of action for civil damages.~/

The application of these provisions to private contracts, particularly those which prohibit bias against a particular person or locality, may produce some unexpected results. In Sullivan Co. v. Wells 24/ the seller of a load of cattle received a worthless check in payment. In the interim, the buyer-sold the cattle to an innocent third party. The original buyer used the services of the defendent, a licensed commission dealer, to make the sale. The original seller sought recovery from the commission dealer. The dealer successfully defended his actions on the ground that he had no choice in agreeing to be the agent for the original buyer in his sale to the innocent third party.

57

Since the Act prohibits discriminatory treatment, he argued that he was not in a position to pick his principal and, therefore, should not be held accountable.

Most courts exhibit flexibility when determining whether preferential or discriminatory treat­ment is "unreasonable" under any given set of circumstances. In Swift & Co. v. Wallace 25/ the court held that all of the factors that determine the scope and nature of the preferential treatment must be considered. The case involved the use of certain allegedly discriminatory discounts, terms of credit and other trade practices. The court upheld the use of the practices on the grounds that they were required by the exigencies of the business and were not otherwise unlawful.

Regulation of Stockyards and Stockyard Dealers

The Act also establishes rules governing stockyards, market agencies, and stockyard dealers.26/ A market agency is defined as any individual or firm engaged in the business of buying or selling-­livestock on a commission basis or furnishing stockyard services.27/ A dealer is any person, not a market agency, engaged in the business of buying and selling livestock, either on his own account or as an employee or agent of the vendor or purchaser.~/

When it is determined that a stockyard is subject to federal regulation, the Secretary of Agriculture must post notices declaring that at the stockyard.29/ Within 30 days of posting, ·every market agency or dealer doing business at the stockyard must register his name and address, the character of the business in which he is engaged, and the kinds of services which he furnishes at the stockyard with the Secretary.30/ The stockyard owner must determine that the services of the market agency or dealer will be beneficial to the stockyard and its customers.31/ This deter­mination must not be unreasonable or unjustly discriminatory. If the Secretary-finds that a registrant has violated any provision of the Act or has become insolvent, he may temporarily suspend registration.32/

The Secretary may require reasonable bonds from most market agencies, dealers, and packers in connection with their livestock purchase operations.33/ Packers whose average annual purchase of livestock is less than $500,000 are exempt.34/ The bond's purpose is to secure the performance of market agencies, dealers, and packers and so-protect farmers and ranchers against losses from selling livestock to insolvent or defaulting purchasers.~/

The stockyard owner and all market agencies at the stockyard are required to file with the Secretary a schedule of rates and charges for stockyard services 36/ within 60 days of the public notice that the stockyard is covered by the Act. If a market agency commences business at the stockyard after the 60-day period, its schedule must be filed with the Secretary before it may begin furnishing any stockyard services.37/ The schedule must be available for public inspection.38/ The Secretary prescribes the preparation and content of the schedules.39/ --

A stockyard owner or market agency may not deviate from the charges for services listed on its schedule.40/ However, the schedule may be amended if ten days notice is given to the Secretary and to the public.42/ The Secretary may allow less than ten days in special or unusual circumstances.TI/

The Secretary may prescribe rates and charges in certain instances.44/ If he determines, after a full hearing, that any rate, charge, regulation, or practice of a stockyard owner or market agency is unreasonable or discriminatory, he may take corrective action. He may specify reasonable minimum and maximum rates 45/ and may prescribe allowable practices and regulations.46/ Owners and market agencies may be ordered to comply with the rates and terms established by t~Secretary.47/

The Secretary establishes rates in a formal lity commissions to determine utility rates.48/ property owned by the stockyard. After alloWing return is determined.

rate proceeding similar to that used by public uti­A rate base is calculated from the value of the for the costs of operation, a reasonable rate of

The Secretary's power to establish stockyard rates has been the subject of much litigation. In Union Stock Yards Co. v. United States 49/ the court upheld the use of a rate base/rate of return formula. The rates derived from the base value were held to have been reasonable.

One method used in determining rates is to examine the rates charged in previous years. In St. Joseph Stock Yards Co. v. United States 50/ the Supreme Court held that the Secretary is not

58

limited to the year immediately preceding the rate hearing, but may also consider rates charged in previous years. In that case, the Secretary had examined the rate structure over the preceding six years.

The USDA is not required to use the same method to determine the rates for different types of stockyards (e.g., auction stockyards, termincal stockyards),51/ but may consider differences in determining the applicable rate formula. Therefore, if a rate base/rate of return formula is used for auction stockyards, it does not necessarily follow that the same formula must also be used for terminal stockyards.

Regulation of Poultry Dealers and Handlers

The Packers and Stockyards Act was expanded in 1935 to cover live poultry markets.52/ The constitutionality of this extension has been upheld by lower courts.53/ The extension applies to live poultry dealers and handlers,54/ and is designed to suppress~nfair, deceptive, and fraudu­lent practices in ~he handling of live-poultry.

The Act authorizes the Secretary to license poultry dealers and handlers.55/ Any person desiring a license must provide the prescribed information to the Secretary. x-license will then be issued unless the applicant has engaged in any prohibited activities within the previous two years 56/ or is financially unable to fulfill the obligations of a licensee.57/ The applicant must have a~opportunity for a hearing on these issues.58/ --

A poultry license may be suspended if the licensee violates any provision of the Act.59/ If the violation is flagrant or repeated, the license may be revoked.~/ However, one court held that the mere fact that the licensee no longer has the financial capacity to fulfill his obligations (a prerequisite to obtaining a license) is not a sufficient reason for revoking the license.~/

Records

The Act requires that the stockyard owner, packer, market agency, dealer, and live poultry handler keep accurate accounts and business records 62/ which disclose all transactions, including the true ownership of the business. The Secretary, upon determining that the records do not meet the statutory standards, may prescribe the manner and form in which those business records must be kept.63/ This authority has been recognized by the courts as essential to accomplishing the pur­poses~£ the Act.64/ The Secretary may not, however, examine the business records of any party prior to issuing a-complaint or charging that party with a violation of the Act.~/

Enforcement Authority

Certain provisions of the Federal Trade Commission Act 66/ have been expressly made applicable to enforcement of the Packers and Stockyards Act by the Secretary of Agriculture.67/ The reason for this, according to the statute, is twofold: (1) to provide for the efficient execution of the Packers and Stockyards Act, and (2) to provide information for Congress.~/

The FTC has jurisdiction over meat, livestock, and poultry products in certain instances in which jurisdiction would ordinarily lie with the USDA.69/ One such instance is when the Secretary of Agriculture requests the Commission to investigate and report on the marketing situation of any commodity.lQ/ The FTC also has jurisdiction over all transactions involving margarine and oleomargarine and over the retail sales of meat, meat food products, livestock products in unmanu­factured form, and poultry products.Z!/

A disclaimer in the Packers and Stockyards Act states that it should not be construed as affecting the power or the jurisdiction of the Interstate Commerce Commission (ICC).72/ Furthermore, the Act does not confer upon the Secretary of Agriculture concurrent po;;r or jurisdic­tion over any matter within the power or jurisdiction of the ICC.73/ Therefore, a stockyard company serving common carriers by loading and unloading stock has been held to be subject to the ICC and not to the Secretary of Agriculture.Z!/

. The opposite situation is equally true: the ICC may not encroach upon the regulatory jurisdic­tion of the Secretary of Agriculture. In one Supreme Court case,!l/ the Commission brought action

59

against certain railroad companies engaged in transporting livestock. The companies' obligation terminated upon unloading the animals at the stockyards. The court held that the Commission did not have the jurisdiction to inquire into the reasonableness of yardage charges made by the stockyards.~/

Any violations of the Packers and Stockyards Act may be reported by the Secretary of Agriculture to the U.S. Attorney General.77/ The Attorney General may begin appropriate proceedings and prosecute in the federal courts.~/ --

Perishable Agricultural Commodities Act

Congress enacted the Perishable Agricultural Commodities Act 79/ to regulate the interstate shipping and handling of perishable commodities such as fruits and~egetables.80/ The Act is designed to prevent unscrupulous merchants and dealers from taking advantage oy-producers by wrong­fully rejecting goods upon their arrival at a point where it is expensive and impractical for the producers to enfor~e their rights.81/ The Act achieves its goals by licensing merchants, dealers, and brokers and by prohibiting variOus kinds of unfair conduct.

General Prohibitions

The Act prohibits any commission merchant,82/ broker,83/ or dealer from engaging in any unfair, discriminatory, or deceptive practice in connection with weighing, measuring, or counting perishable agricultural commodities.84/ For the purposes of this Act, the term "perishable agricultural commodities" covers only fresh fruits and vegetables including those that have been frozen or packed in ice.85/

As a general rule, any person who buys or sells perishable agricultural commodities in whole­sale quantities is considered to be a dealer.86/ However, the Act contains some exceptions. A per­son purchasing these commodities solely to sell them at the retail level is not a dealer if the invoice cost of his purchases is less than $200,000 in any calendar year.87/ Producers are not con­sidered dealers with respect to the sale of their own products.88/ Those-;ho buy commodities (other than potatoes) for canning or processing within the state where~hey were grown are not dealers, even though the processed or canned products are subsequently shipped in interstate commerce.~/

The Act prohibits a dealer from failing to deliver any perishable agricultural commodity in accordance with the terms of the contract.90/ Commission merchants are forbidden to discard, dump, or destroy perishable commodities without reasonable cause.91/ A dealer, broker, or commission merchant is required to make prompt payments in any transaction involving perishable commodities.~/

A dealer will be held liable under the Act for rejecting without reasonable cause any shipment of perishable commodities he has contracted to buy.93/ Of course, not all rejections will be deemed unreasonable. In J.R. Simplot Co. v. L. Yokon & So;-Produce Co. 94/ a dealer contracted for a ship­ment of clean potatoes. The potatoes actually delivered were caked with dirt and were rejected by the dealer. The court held that the Act did not prevent the rejection since the seller had not been complied with the contract.

Licensing

All brokers, dealers, and commission merchants must be licensed.95/ Any other person desiring to be licensed under the Act must apply to the Secretary of Agricult~.96/ For example, a person who is exempted by one of the provisions of the Act may still secure a license.97/ The form and details of the license application are prescribed by the Secretary.98/ --

A licensee may conduct business under more than one trade name or change the name under which the business is conducted without securing a new or additional license.99/ The Secretary may disallow the use of a deceptive or confusing trade name.100/ The licen~ of anyone who continues to use a trade name disapproved by the Secretary may be suspended for up to 90 days.101/

The Secretary may refuse to license any person who has committed flagrant or repeated violations of the Act 102/ or whose license has been revoked 103/ within two years of the date of application. An ineligible applicant may seek a new license at the end of the two-year period, but must furnish a

60

sur~ty bond.104/ Without a surety bond, the applicant must wait three years after the date of the disqualifying incident.105/

Every licensee is required to maintain accounts and records that fully and accurately disclose all nusiness 106/ and indicate the true ownership of the business, whether by stockholding or other­wise. Failure-to maintain the required records may result in the suspension of the license.107/

Remedies

A person who violates the Act is liable to the person injured by his actions for the full amount of the damages sustained.108/ This liability may be enforced by a complaint made to the Secretary of Agriculture or by a suit in any court of competent jurisdiction.109/ A complaint in the form of a petition stating the facts supporting the alleged violation may be filed with the Secretary within nine months of the cause of action.110/ If the Secretary decides that the facts justify the complaint, he will send a copy of the complaint to the person charged.!ll/

A complaint may also be brought by any state officer, state agency or USDA employee for the purpose of investigating possible violations of the Act by persons within their jurisdiction.112/ The Secretary may investigate the matter if the facts warrant.113/

A hearing be held on any complaint where the damages claimed exceed $3,000.114/ Lesser complaints may be resolved on the basis of depositions and verified statements of fact.115/ The hearing also may be waived by the person accused of violating the Act. The Secretary decides whether a violation has actually occurred.116/ If a violation is found, he may determine the dama­ges and issue a reparation order for that ~unt.117/ The order may be appealed within 30 days to a federal district court.118/ ---

Produce Agency Act

The Produce Agency Act 119/ prohibits the destruction or dumping of farm produce 120/ without good cause.121/ Enacted in 1927,122/ three years before the Perishable Agricultural Commodities Act,123/ the Produce Agency Act does not abrogate or nullify any other statute 124/ except to the exte~that it is inconsistent with the Act.126/

The Act also prohibits defrauding those who supply or ship farm produce.127/ All produce received is subject to truthful and accurate accounting. Violation of these prohibitions is a mis­demeanor.128/

The Secretary of Agriculture is authorized to establish rules and regulations for implementing the Act.129/ In enforcing the Act, the Secretary may cooperate with state agencies and officers and employees of state agencies.130/ The Justice Department is responsible for prosecuting violators.!ll/ ---

Federal Seed Act

The Federal Seed Act,132/ administered by the USDA, is designed to insure that producers know the kind and quality of seed they are purchasing. According to one interpretation,133/ the purpose of the Act is simply to make the buyer aware of the product and to protect again~adultera­tion. The burden of ascertaining what is actually being sold is placed upon the seed distributor, who is presumed to be in the best position to know.134/

The Act makes it unlawful to ship improperly labeled seeds 135/ in interstate commerce.136/ Labeling must include the name of the kind or variety of agricultural seed 137/ and its origin,138/ if the Secretary of Agriculture has determined that the point of origin is important. In the case of mixtures, any seed comprising more than five percent must be identified.139/ The label must indicate the percentage by weight of any inert matter.140/ The name of the-cDmpany that ships the seeds must appear on the label.141/ ---

The USDA may analyze or examine seeds that are subject to the Act.l42/ The rules and regula­tions for examining seeds are promulgated by the Secretary of Agriculture,143/ or, for seeds shipped in foreign commerce, jointly by the Treasury Department and the USDA.144/ ---

61

Reasonable tolerance and percentage regulations may be established for seeds.145/ compliance with these regulations, seed samples may be taken.146/ The samples must be uniform with respect to the mass of seeds from which they are taken.147/

To insure substantially

Any seed shipped in violation of the Act in interstate commerce may be seized.148/ The Secretary may report the violation to a United States Attorney for prosecution.149/The person against whom the proceeding is instituted must be given appropriate notice and an opportunity to respond.150/ A federal district court may condemn the seed, in which case it must be destroyed, sold, or-;,eturned to the owner.151/ If the seed is returned, the owner must pay the court costs and fees. He must also execute a ~ty bond guaranteeing that the seed will not be disposed of in any manner contrary to the provisions of the Act.l52/

Some litigation has resulted on the issue of state versus federal enforcement of seed laws. In Ferry Morse Seed Co. v. Corley 153/ an action was brought in a federal district court to enjoin state officials from seizing seeds shipped into the state by an out-of-state seller. The state officials had determined that the seeds were not in compliance with state law. The district court held that the state officials could be enjoined from enforcing the state statute since such action constituted an unlawful burden on interstate commerce.

Legislation Affecting Agricultural Producers' Associations

Early cooperative marketing efforts ran afoul of the nation's antitrust laws.154/ Now, however, due largely to the enactment of the Clayton Act, the Capper-Volstead Act,~d the Cooperative Marketing Act of 1926,155/ agricultural producers may legitimately form cooperatives. Furthermore, the Agricultural Fair Practices Act 156/ prohibits discriminatory action against those producers who form or join a cooperative.

Clayton Act

The first provision granting producers' cooperatives some protection from the antitrust laws was section 6 of the Clayton Act,l57/ which provided that nonprofit agricultural organizations without capital stock would not be viewed as conspiracies in restraint of trade. This limited exemption from the antitrust laws did not achieve the intended purpose because the cooperatives could not offer stock, were required to be nonprofit, and were required to confine their activities to the mutual aid of their individual members.

Capper-Volstead Act

The Capper-Volstead Act,158/ enacted eight years after the Clayton Act, did much to clarify and extend the earlier act. The Act does not expressly exempt producers' associations from the antitrust laws, but rather lists certain activities in which those associations may engage. For this reason, it is usually referred to as an "implied exemption."

The Act authorizes producers of agricultural products to join together in associations (with or without capital stock) in order to collectively process, prepare for market, handle, and market their products in interstate and foreign commerce.159/ The provisions do restrict voting rights, maximum dividends, and the marketing of nonmembers.-products. Qualifying organizations are allowed to use a common marketing agency and may enter into agreements to carry out their legitimate objec­tives.160/

The Act prohibits producers' associations from monopolizing or restraining trade to such an extent that the price of any agricultural product is "unduly enhanced. "161/ If the Secretary of Agriculture believes that prices have been unduly enhanced, he may file-;-complaint against the association. After a hearing, a cease and desist order may be issued,162/ which may be appealed in the Federal district courts. ---

Cooperative Marketing Act of 1926

The Cooperative Marketing Act of 1926 further expanded the agricultural exemption.163/ This act allows producers of agricultural products to "acquire, exchange, interpret, and disseminate

62

past, present, and prospective crop, market, statistical, and other similar information by direct exchange ••• and/or by and through a common agent selected by them."164/

Agricultural Fair Practices Act

The Agricultural Fair Practices Act 165/ was passed in 1968 to establish standards of fair practices for handlers of agricultural products 166/ in their dealings with producers.167/ The Act recognizes the importance of numerous individual farmers voluntarily joining together in cooperative organizations to improve their marketing and bargaining positions. Interference with this right adversely affects the free and orderly flow of goods in interstate commerce, and is deemed by the Act to be contrary to the public interest.168/

The Act proscribes certain forms of interference with cooperative associations. A handler 169/ may not coerce any producer to join or refrain from joining an association of producers 170/ or --­refuse to deal with any producer because he has joined or belongs to such an association.171/ Discrimination aga~nst any producer with respect to price, quantity, quality, or other term of purchase is prohibited if it is based on membership in a cooperative association.172/ A handler may not coerce or intimidate any producer to enter into or to terminate a membership agreement or marketing contract with an association of producers,173/ or offer an inducement to a producer for refusing to join a cooperative.174/ A conspiracy, cQ;bination, or agreement to commit any of these proscribed acts is also a violation of the Act.175/

A disclaimer in the Act states that it should not be construed as preventing handlers from selecting their customers and suppliers for any reason other than membership in a cooperative asso­ciation 176/ or requiring them to deal with an association of producers.177/ This section is designed to protect the rights of handlers to continue to deal with producers directly, even though the producers may be members of a cooperative association.178/

The Secretary of Agriculture may enforce the Act by requesting the Attorney General to bring a civil action against violators.179/ The aggrieved patty may also bring civil action 180/ seeking preventive relief in the form of a restraining order or a preliminary injunction to furnish a bond.181/ Any person injured because of a violation of the Act may seek to recover the amount of damag~sustained.~/

Agricultural Marketing Agreement Act

The Agricultural Marketing Agreement Act of 1937 183/ reenacted many of the provisions of the Agricultural Adjustment Act of 1933.184/ The Act states that "the disruption of the orderly exchange of commodities in interstate co~rce impairs the purchasing power of farmers and destroys the value of agricultural assets which support the national credit structure •••• "185/ The Act, therefore, seeks to maintain orderly market conditions for agricultural commodities so that parity prices for farmers will be achieved.186/ The Act also seeks to protect consumers through a gradual correction of prices at a rate deemed by the Secretary of Agriculture to be in the public interest.187/ The demand in domestic and foreign markets must be taken into consideration. Milk prices may-exceed parity if certain price factors in farmer purchases are involved.188/

The Agricultural Marketing Agreement Act allows the Secretary of Agriculture to regulate marketing between agricultural producers and handlers. "Handlers," for the purposes of this Act, are processors, associations of producers, and others engaged in the handling of any agricultural product covered by the Act.189/

Only those products specifically listed in the Act fall under the Secretary's jurisdic­tion.190/ Basically, the regulated products can be grouped into two categories: (1) milk and ·dairy products and (2) fresh fruits, vegetables, peanuts, and tree nuts. Separate provisions govern each group.

The Act authorizes the use of two kinds of regulatory devices. The first of these is the marketing agreement, which is essentially a contract between producers and handlers. 191/ The agreement is voluntary in that not all producers have to participate. A producer ne~not be a member of agricultural cooperative in order to become a party to the marketing agreement.

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The marketing agreement sets forth the terms of trade between the parties. When approved by the Secretary of Agriculture, an agreement is specifically exempted from antitrust laws.l92/ This statutory exemption has been upheld by the courts.l1l/

The second regulatory device authorized by the Act is the marketing order.l94/ This marketwide contract between producers and handlers, issued by the Secretary of Agriculture for a particular commodity, establishes the price which all handlers must pay for that commodity in a defined geographic area.l95/

A market order is usually initiated when a group of producers in a particular market area peti­tions the Secretary of Agriculture to establish an order program for their area. A hearing is then held in that area.l96/ USDA employees may investigate the market situation to determine what terms are needed. They n;y also participate in the decisionmaking process when the final order is drafted.

This activity on the part of USDA employees was challenged in Marketing Assistance Program, Inc. v. Berglund.l97/ In that case, a USDA employee had met with members of a dairy cooperative prior to a hearing on the market order and had helped draft the proposed order. He later helped the Secretary of Agriculture write his final decision. The court ruled that nothing in the Act pre­vented this sort of action by USDA investigators.

Market order proceedings also may be initiated by the Secretary if he feels that it will further the purposes of the Act.l98/ He must give all parties proper notice of and an opportunity for a hearing upon a proposed order.l99/

Before a proposed market order is issued, the Secretary must submit it to a referendum of the affected producers. The order must be approved by two-thirds of the producers of the commodity in the market area, or by producers who account for two-thirds of the volume of trade in the commodity.200/ If a marketing agreement is signed by handlers a referendum is unnecessary.201/ However, this is seldom the case. --

The referendum provision of the Act has been ruled constitutional. In United States v. H. P. Hood & Sons, Inc.,202/ the referendum procedure was challenged as an unconstitutional delegation of legislative authority to producers and officers of producers' cooperatives. The court ruled against this interpretation, noting that the procedure accurately assessed producer sentiment on an impor­tant issue.

The Act equates approval or disapproval by a producer's cooperative with approval or disappro­val of its members.203/ A problem may occur, however, when producers are represented by more than one cooperative. In George Benz & Sons v. Hardin,204/ for example, 542 producers were represented by two cooperative associations. Both associations voted on behalf of their members in favor of a market order referendum. Those opposed to the market order argued that there was a possibility of duplication in this situation. The court upheld the vote, citing the fact that the total vote was overwhelmingly in favor of approval. It also held that the provision in the Act allowing a coopera­tive to vote for its members prevails over a state law restricting proxy voting by members of a cooperative.

In regard to milk and dairy products, the market order may include minimum prices as well as virtually all other terms of trade.205/ For all other commodities, all terms of trade other than price (e.g., grades, quantities, si~, and qualities)206/ may be negotiated.207/ No term of a market order or marketing agreement however, may regulate or restrict the advertising of the com­modity.208/

Any handler subject to an order can petition the Secretary of Agriculture to have it modified.209/ The handler must be afforded an opportunity for a hearing. After the hearing the Secretary makes a ruling, which is generally considered to be final.210/ The federal district courts have jurisdiction in equity to review the Secretary's ruling.211/

A marketing order may be terminated or suspended by the Secretary if he determines that it no longer meets the intent of the Act.212/ Furthermore, a marketing order or a marketing agreement must be terminated if a majority of~e producers,213/ accounting for more than 50 percent of the volume of the commodity in the market area, so desire. The termination date is the end of the current marketing period, as specified in the agreement or order.214.

64

Milk Orders

Dairy products are regulated separately by the Act because of the special perishability and pricing problems they present. Surplus milk can cause problems for producers, since it cannot be stored economically for a long period. Milk is usually disposed of in the fluid or manufactured milk market. However, manufactured milk prices are generally lower than fluid milk prices, and fluid milk is usually produced under more elaborate quality standards which tend to increase the cost of production.215/ The regulatory program must deal with these inequities.

A milk market order establishes minimum (but not maximum) prices for different classes of milk sold by producers to handlers.216/ Minimum prices 217/ may be determined through a classified pricing scheme or the use of uniform blended prices.218/

Under the latter scheme, a producer receives the same price for all milk, regardless of its intended use. This blend price is computed by dividing the value of all of the milk sold in the market area by the total quantity.219/ Although handlers may purchase varying proportions of fluid milk and milk for manufacturing, they settle their differences through the use of an equalization fund.220/ Under this system, a handler who uses the fluid milk form more than the market average pays into the fund, and one who uses less fluid milk than average receives money to bring the payment to producers up to the blend price.221/

The Supreme Court has upheld the use of blend prices. In United States v. Rock Royal Co-op 222/ the Court noted that under a blend price system "each producer dealing with a proprietary handler gets a uniform or weighted average price for his milk, with differentials for quality, location, or other usual market variations, irrespective of the manner of its use."223/ In another federal case,224/ the court noted that the use of a blend price not only prev~s cutthroat competition among producers, but also helps mitigate the adverse effects of seasonal supply fluctuations on the consumer.

Nonmilk Orders

Market orders for commodities other than dairy products may encompass a variety of terms and conditions. Quantity limitations may be established for the various grades and sizes of the com­modity.225/ Allotments may be established so that supplies can be equitably apportioned among the producers.226/ Such allotments are based on the amounts sold by each producer in the past and/or the quantities available.227/

The market order may provide for the control and disposition of a commodity surplus.228/ These provisions should help equalize the burden of the existence and operation of reserve pools which might also be dealt with in the market order.229/

The parties to a market order may wish to delineate inspection requirements.230/ They may also specify the kinds and sizes of containers to be used in packing the product.lll/ ---

If producers wish to promote the marketing, distribution, and consumption of their products, they can provide in their market order for the establishment of production and marketing research projects.232/ The expenses for the projects could be paid from funds collected pursuant to the order.233/

Market orders should be limited to the smallest reasonable regional production or marketing areas.234/ If feasible, the Secretary is to issue several orders within a marketing or production region.235/

Handler Regulation

Handlers within each area where a market order is in effect may be fully regulated, partially regulated, or unregulated.236/ A handler who purchases a commodity and sells products largely within the market area is fully regulated. The partially regulated handler procures most comr modities within the market order area (and usually is physically located there) but transacts most sales outside of the order area. The unregulated handler may engage in some transactions within the market order area, but usually does not reside in or have many sales or procurements in the order area.

65

Fully regulated handlers are bound completely by the market order. Those who are partially regulated must abide by terms that apply to the particular transactions (procurements or sales) that occur in the sales area. A handler, particularly one that operates in a large urban area, may be partially regulated in more than one market order area. Unregulated handlers are exempt from the market order.

Administration of the Order

The Secretary of Agriculture may select an agency to administer the market order.237/ The agency may make rules and regulations and may investigate complaints of violations.238;--Following an investigation, a report and recommendations may be made to the Secretary.239/ Regulated handlers are assessed for the expenses of the administrative agency.240/ ---

Records

The Act sets forth recordkeeping requirements for all parties to a marketing agreement and all handlers subject to a market order.241/ The Secretary can request the information needed to deter­mine whether the market order or agreement is being carried out 242/ and whether there has been any abuse of exemption from the antitrust laws. ---

The required information must be furnished on forms prescribed by the Secretary.243/ The Secretary may also examine income tax reports, contracts, correspondence and other relevant documents to ensure compliance.244/ However, the use of this information is governed by strict rules of confidentiality.245/ ---

Enforcement

The Act is enforced through the use of both civil and criminal penalties. Any person who exceeds an allotment established pursuant to the Act may be forced, through a civil suit, to forfeit to the federal government an amount equal to the value of the excess at current market prices.246/ A handler who violates a marketing order can be criminally prosecuted and fined for each ---violation.247/ A defendent who does not pay the fine can be remitted to the custody of the Attorney General.248/

Commodity Futures Trading Commission Act

Commodity futures were first regulated in the 1920s. The Futures Trading Act, passed in 1921, was soon struck down as an unconstitutional attempt to use taxation to regulate market activity.249/ The Grain Futures Act, which reflected that ruling, was enacted in 1922.250/ This was designed pri­marily to curb abuses by speculators that adversely affected the agricultural commodity futures market 251/ rather than to protect market investors.

The Grain Futures Act was amended in 1936 to incorporate some protection for commodity futures investors. The name of the act was changed to the Commodity Exchange Act 252/ to more accurately reflect its scope, which now included nongrain agricultural products such as-cotton, butter, and eggs. Subsequent amendments brought other agricultural commodities within the purview of the Act.253/

The next major overhaul of the Act occurred in 1968. The revision added livestock futures to the list,254/ restricted broker licensing, and broadened antifraud provisions. The Secretary of Agriculture was given the power to disapprove any exchange rule that violated the act.

The most recent amendment occurred with the passage of the Commodity Futures Trading Commission Act of 1974.255/ The Act created a five-member regulatory agency, the Commodity Futures Trading Commission (CFTC).256/ Commissioners are appointed to a five-year term by the President with the advice and consent-of the Senate. They must be knowledgeable in the field of futures trading.257/

Although the Commission is independent, it does maintain an office within the USDA to facili­tate communication between the two entities. 258/ This office is staffed by employees of the

66

Commission. The Secretary of Agriculture in turn appoints a liaison officer to maintain liaison between the two bodies.

All of the powers formerly vested in the Secretary of Agriculture and the Commodity Exchange Commission were transferred by the Act to the CFTC.259/

The records, funds, property, and personnel of the former commission were also transferred. The CFTC is required to submit annual reports to Congress.260/ In addition, the General Accounting Office may examine the Commission's documents and records and may audit the Commission.261/

The C~~C has much broader jurisdiction than the old Commission. It is authorized to regulate virtually all futures trading in virtually all goods and articles,J:!!l:_/ including "all services, rights, and interests in which contracts for future delivery are presently or in the future dealt with. "3.2.2/

Contract Markets

A person can only deal in commodity futures through a member of a board of trade 264/ that has been designated by the CFTC as a "contract market. "265/ This covers not only the exec:t"ion of futures contracts but also the quotation and reporting of futures contract prices. All contracts must be written, and show the date, the parties and their addresses, the property covered and its price, and the terms of delivery. 266/ The board member must keep the record for three years, and make it available for inspection by a representative of the CFTC or of the u.s. Department of Justice.267 I

The Commission may designate a board of trade as a "contract market" only under certain con­ditions.268/ Official inspection services (approved by the CFTC or by the Secretary of Agriculture) must be available to the board of trade.269/ Reports must be filed showing the details and terms of all cash purchases of or futures contracts delivery for commodities entered into by the board or its members.270/ The Commission determines the manner and form of the reporting requirements. The governing board must seek to prevent the dissemination of false or misleading information or infor­mation on conditions that affect or tend to affect the price of commodities 271/ by the board or its members.272/ --

The board must prevent the manipulation of prices or the cornering of any market.273/ It may not exclude from membership any duly authorized representative of a producer's cooperative engaged in cash commodity business.274/ A cooperative association must demonstrate financial responsibility and must agree to comply wi~the same terms and conditions as other members of the board of trade. However, a contract market cannot issue a rule that could be construed as prohibiting cooperatives from paying dividends to their patrons.lll/

Each contract market must furnish the Commission with copies of its bylaws, rules, regulations, and resolutions.276/ All books, records, minutes, and journals of proceeding must be kept three years and be available for inspection.277/ Operators of warehouses used to store commodities for future delivery must also comply with ~cific recordkeeping requirements.~/

The CFTC must approve or disapprove any bylaws and regulations proposed by a designated contract market.279/ The contract market must revoke any disapproved bylaw or regulation.280/ In limited circumst~es, a contract market may adopt temporary rules without prior Commission appro­val.281/ These temporary measures must be initiated by a two-thirds vote of the market's governing boar~and the CFTC must be notified of the action with a complete explanation of the situation.282/

The Commission may require that the commodities traded under contract for future delivery con­form to official U.S. grade standards.283/ It may also require a contract market to accept receipts issued under the U.S. Warehouse Act 28~in satisfaction of any futures contract.285/ The warehouse in which the commodity is stored mu~omply with requirements imposed by the contiact market on other warehouses in regard to accessibility and suitability for warehousing and delivery.286/

Registration With the CFTC

Any person wishing to operate as a futures commission merchant 287/ must register with the CFTC.288/ Rules are set forth in the statute regulating the care and use of money received by com-

67

mission merchants from their customers.~~/ Floor brokers l12_/ are also required to register with the commission.~/

The application forms for commission merchants and floor brokers are designed the CFTC.292/ Commission merchants must supply the names and addresses of all branch office managers and of all agents soliciting or accepting futures orders.29~/ A partnership or a corporation seeking registra~ tion must supply manes of the officers, partners, directors, and stockholders. The registration expires at the end of each calendar year but may be ;-:enewed unless it has been revoked or is currently suspended.294/

Applicants may be required to meet and maintain m:~.n:tmum financial requirements established by the Commission.295/ These requirements will be considered met if the applicant is a member of a contract market and conforms to the minimum financial standards and reporting requirements established by that !lk'1rket in its bylaws and regulations.296/

The CFTC is charged 'with adopting standards which govern qualifications for commission merchants and floor and their' associates and may develop 1.1ritten proficiency examina-tions for In of examinat1ons adm1nistered by the Commission itself, contract markets or futures associations may adopt and administer appropriate

The Act also requires that commodity trading advisors and coum1odity pool operators 299/ be A commodity trading advisor is any person '"ho engages in the business oT"a:dvising

directly or through publications, as to the value of commodities or the advisability of trading in commodity futures.30l/ Specifically excluded from this definHion are: (1) banks and trust companies, (2) ne\>lspapel: reporters, edito1cs, lawyers, accountants, or teachers, (3) publishers of bona fide newspapers, magazines, or business publications or general interest, (4) floor brokers or future commission merchants, and (5) any contract market.302/ The Commission may also e>~empt other classes of persons by means of a rule or regulation. In any e'\l'ent, the furnishing of commodity advisory services by any of the persons must be incidental to the con-duct of theh· business or p:rofession.303/

Fraudulent activity or nrLs representation on the part of tr,Eiding advisors or col1Lmodi ty pool operators Even registered individuals may not hold themselves out as being approved, by the federal gmrernment.].Q~/

Excessive speculation in any fo;r future is deemed to be a burden on interstate commerce.306/ In order to control such speculation, trading which may bed;;ne or positions which may be held any position limits may be established for different co1mnodities, l1l8Xkets, The Commission issues orders to implement rules and limitations. No order, bona fide hedging transaetions or posit:lcons

limit the amount of trading or

OV' ' - months. however, may regulate

The Act specifies !reporting and recordk,eeping 'Hequirements for the various entities involved in commodity futures trading, Futures commission merchants and floor brokers must maintain records of their own transactions or positions and of those of their custom,O!rs.309/ The record l:Jooks must be open to inspection by any representative of the GFTC or of the Justice Department. Every clearinghouse and contr'act rna:rket must maintain trading recor,ds.3l0/ Brokers and commission merchants are r<oquired to maintain trading records for each custo;;;e"r so as to be identifiable with the recon]s kept the clearinghouses and contract The Commission may report on information contained in the reeords

Before each trading day, the exchanges must publicize the volume of trading of each type of contract for the previous and other information. required the Commission.3llf/ The Commission may establish different :r·eporting requirements for the var:ious clearingho;ses, contract markets,, and exchanges

A Futur,es association may reg:i.ster >1'ith the CFTC submitting a required :Cmnr. with :information 316/ on its organization, membership, and rules of procurement as "V<ell as copies of the

68

constitution, articles of incorporation, or bylaws. The Commission will only register associations that operate in the public interest.317/ The rules of the association must provide that any contract market, or any unit registered under the Act, or any other unit designated pursuant to the rules of the association may restrict its membership on the basis of the type of business done.318/

Investigatory Power

The CFTC is authorized·to investigate boards of trade and persons subject to the provisions of the Act;319/ to investigate marketing conditions, including supply and demand, cost to the consumer, and handling and transportation charges; and to furnish producers, consumers, and distributors with information on commodity markets and conditions in our country and in foreign countries that affect the markets.320/ The Commission may publish information it considers to be in the public interest.

The results of the Commission's investigations are to be made available to Congress.321/ In addition, the Commission is required to submit a written report detailing its operations to Congress within 120 days of the end of each fiscal year.322/ Typically, the report will include information relevant to the administration of the Act and r~mmendations for future legislation.323/

One of the new provisions of the 1974 Act related to technical innovation in commodity futures trading.324/ It directs the CFTC to research the feasibility of trading by computer; the use of modern information systems technology and electronic data processing; and modern communication systems for commodity exchanges, boards of trade, and the Commission itself.

Antitrust Considerations

A provision of the Act requires the CFTC to take the least anticompetitive means of achieving its objectives.325/ Therefore, antitrust considerations must play a part in the adoption of any Commission rule-or regulation or in the approval of any bylaw, rule, or regulation of a contract market or registered futures association.326/

In a recent case,327/ however, the Supreme Court noted that the Commodity Exchange Act does contemplate some form ~anticompetitive activity which might otherwise not be allowed, since the exchange and its members will of necessity restrain trade to a certain extent. The courts must distinguish between the ordinary application of antitrust principles and the special self-regulatory powers the Act grants to exchanges.328/

Farmer-to-Consumer Direct Marketing Act

The Direct Marketing Act was passed in 1974 to facilitate the direct marketing of agricultural produce from farmers to consumers 329/ through appropriate means and on an economically sustainable basis.330/ The Act is designed to increase the food quality and to provide increased financial returns-to farmers. The marketplaces within the purview of the Act include, but are not limited to, roadside stands, city markets, and vehicles used for house-to-house marketing of agricultural com­modities.331/

The Secretary of Agriculture is directed to provide a continuing survey of direct marketing methods.332/ This survey may be undertaken by the USDA's Economic Research Service or any other agency w~h the Secretary considers appropriate. The survey reviews such topics as the number of various marketing methods in existence, the volume of business conducted through each marketing method, and the impact of the marketing methods upon financial returns to farmers and food quality and costs to consumers. The impact on the economic viability of small farmers must also be taken into account.333/

In order to implement the program, funds are distributed among the individual states 334/ according to the feasibility of direct marketing programs within each state.335/ The funds are divided between a state's agriculture department and its extension service on-the basis of each agency's ability to perform the activities. required by the Act.~/

The Act requires the development of conferences for sharing direct marketing information among farm producers, consumers, and other interested persons or groups.21r/ Other activities include

69

formulating direct marketing legislation, determining locations for direct marketing facilities, and disseminating information on the establishment: and operation of direct marketing systems.338/ The agriculture departments and extension services may provide technical assistance to indivi~ls or groups interested in establishing such facilities or systems

The Secretary of periodically revievils the activities carried out under the Act and reports to the appropriate Congressional cornmitt.ees.Jij,(l/ Annual reports must attempt to analyze the effectiveness of the Act. A state-by-state summary of USDA survey results and of the activities and accomplishments of the state extension services and agriculture departments is required.34!_/

Potato Research and Pro!lllotiou

The federal potato research and promotion program oeeks markets by regulating potato handlers,343/ A common another exempt.34:::_/ Any order issued by~the Secretary of referred to as a "plan."J45/ The Secretary is authorized to on potatoeso34.6j The funds raised ln this manner are used tising, and promotion of potatoes.

to maintain, expand and improve potato contract carrier of potatoes owned Agriculture under the program is adopt a plan fat· collect.ing assessments

provide research, development, adver-

The Secretary must give due notice and opportunity fo:r a hearing on a proposed plan._l47/ A hearing also l!l.ay be :requested by any person who pr:oposes a plan.~/ The Secretary of Agriculture conducts a referendum on a proposed plan among potato producers.349/ The plan must be approved by at least tvm-thirds of the producers voting in the or by the producers of at least t1qo thirds of the potatoes during representative period.350/ A plan also may be terminated by 351 In either case, the ballotiT,g is eonfidenti~l_g/

A National Potato Promotion Board administers the plan :lssued the The Board, selected '¥Jhose i:nembers Berve without compensation~

by the Secrrc,tary from nomi.nat:ions made by representatives of

The Board may make rules gate, and report to the recommend amendments to

regulations to i'nulement the plan,356/ It may receive, investi~ of violation of the-plan.]57/ The Board may also

The Board ffiust pic~cpare a budget for ::cesea:reh:. may recom1nend a particula~:r assessil.!er.~t tn cover anttelpated is not in favor of the potato n'!sea:r.ch and promotion program

~ advertisir1.g~ and prornotionG359/ It An individual producer who

a refund of the

and extend foreign markets for The funds raised through the program may be used to domestic potatoeso362/ Assessments mray accumulate over A7evenues in years ~n potato production is

the v.ears as .a reser\rc~ fund to offset lo\f¥ter Ho'\ve'Jer, the reserve fund cannot exceed

the amount budgeted two years'

Some restrictions apply to the v'iays in ~Jh:l.eh the funds be spent~ The Board may not use or to p1·omote any private brand them to attempt to influence or action

names~ J:!!!!..l

The Beef Research and Information was designed to strengthen cattl·e and beef markets and to provide for a contim1ous and program of research, consumer information, and producer information.J6gj The primary tool of this program is the beef research and promotion order.369/ The order is ap;plicable-to producers and sla~ghterers in all areas of the United States.

The .Secret.clry of 2Lgrlcn1ture must duct a :~eferendum among beef the referendum and mu.st

du.e n,otice <md opportunity for a hearing and con-, :(or any pr,,)posed m:de,r. Producers must notifte,d of

iigriC.iJ.lture Stabllizatlon. and Conse1cvat:ion Service )

70

prior to voting. An order cannot be issued unless at least 50 percent of the registered producers vote and a majority 373/ of these favor the order.

Any promotion plan must be directed toward increasing the general demand for cattle, beef, or beef products. No references to private brands or trade names may be made if the Secretary deter­mines that such action will result in undue discrimination against the cattle, beef, or beef pro­ducts of other persons.374/ False or misleading claims on behalf of beef or with respect to the quality or value of any competing product are prohibited.375/

The Act authorizes the Secretary of Agriculture to appoint a Beef Board of not more than 68 members.376/ The term of appointment is three years, with no member being allowed to serve more than six consecutive years. The Beef Board appoints from its members a 7- 11-member executive com­mittee to conduct routine business as determined by the Board. The Executive committee must broadly represent the beef and cattle industry.377/

The Board may develop advertising, sales promotion, consumer information, research, and deve­lopment plans.378/ Such plans are not effective until approved by the Secretary. Proposed budgets must also be submitted to the Secretary for approval and copies of the budget must be submitted to the House Committee on Agriculture and to the Senate Committee on Agriculture, Nutrition and Forestry.2}~/

The assessments which finance the promotion programs are collected from cattle producers at the time of the sale or transfer of cattle 380/ based on the value of the transaction. The assessment rate must not exceed one half of one percent.381/ Cattle slaughtered by a producer for his own con­sumption are not subject to the assessment.38~ Assessments can be refunded to those producers who do not want to participate in the program.383/

Wheat Research and Promotion

The Wheat and Wheat Foods Research and Nutrition Education Act, passed by Congres.s in 1977,384/ is similar to the potato and beef promotion legislation. The Secretary of Agriculture may issue~ order to promote American wheat in foreign and domestic markets.385/ The order may establish nutri­tion education programs for wheat, processed wheat, and end prod~s.386/ Promotion of private brands or trade names and unfair or deceptive practices on behalf of th; wheat industry or with respect to competing products are prohibited.387/

The promotional agency created by the Act is the Wheat Industry Council, which may consist of up to twenty members.388/ The Council administers the order issued by the Secretary, makes rules and regulations to effectuate the order, may suggest amendments to the order, and may also receive, investigate, and report to the Secretary complaints of violations.389/

The Council is composed of wheat producers, processors, and consumer representatives appointed by the Secretary. Its functions are financed through an assessment based upon the volume of transactions,390/ not to exceed five cents per hundredweight of processed wheat purchased or transferred.391/ The assessments may be accumulated to establish a reserve.

The Council must maintain records available to the Secretary for inspection.392/ It must also report on receipts and disbursements of funds.393/

An order is adopted on the basis of a referendum conducted among endproduct manufacturers.394/395/ An order may likewise be terminated through the referendum process.396/

Egg Research and Promotion

The Egg Research and Consumer Information Act,397/ passed in 1974, affects persons engaged in the hatching of egg-type chicks and started pullets~s well as persons engaged in the production of commercial eggs.398/ This legislation is designed to develop egg markets and to increase consumer awareness of the nutritional value of eggs. Congress felt that individual egg producers would not be able to carry out the necessary research and promotion to implement these goals without a collec­tive program to provide adequate financing.399/

71

In order to achieve the objectives of the Act, the Secretary of Agriculture ma.y issue an order 400/ which will be administered by the Egg Board, composed of up to 18 appointed members.40l/ The Egg Board is responsible for investigating complaints of violations of the order and it may-­make recommendations on possible amendments.40~/

Board members must be egg producers, representatives of egg producers, or consumer represen-tatillesc403/ They are appointed by the Secretary from nominations submitted eligible organiza-tions, associations, or cooperatives

Eligible organizations are those certified by the Secretary. Certification is based on a report submitted by the organization 405/ which details the nature and size of its active mem­bership, its geographic range, its functions, and the sources of its operating funds.406/ If more than one organization is certified by the Secretary for a particular area, the organ{zations may caucus to determine the area"s nominations for the Egg Board.40~/

The the Egg

has the right to approve advertising, promotlon, or research plans developed The Board must submit fiscal-year budgets for

Assessments are collected by handlers from each producer LdO/ and turned over to the Egg Board. The assessment cannot exceed 10 :cents per case of commercial egg'S .• 411/ The funds may not be used to influence policy or action.4l2/ Producers who do not-;;;;:;-nt to participate in the program may file for a refundo_:;_l3/ -~

All orders must be approved by referendum. the producers voting in the referendum, or by a least t~~~o-thirds of total egg production during

An order must be favored majority of the producers a representative periodo

by at least two-thirds of voting if they produce at

An order may be terminated or suspended by the Secretary or by a referendum of producers.~/ Only a simple majority is required terminate or suspend an order, but the action does not become effective until six months after the vote.~.:!:~) Orders may be amended. in the same way in which they are

An order may specify the terms and conditions under >rihich a may be exempted from the Act.417/ To be eligible for exempl:ion, an egg producer may not 1nave more than 3,000 hens durirlgthe three-month preceding the assessment date,.:'!l8/ Producers whose eggs are used pri-marily for baby chicks may be

Tobacco Statistics

The Secretary of collects and publishes statistics on the quantity of leaf tobacco in the United States and Puerto Rico o~;Jned by dc2alers, manufacturers, warehouse operators, brokers, cooperatives, and others who are not the original grm,yers of The statistics, compiled quarterly for an annual :report, Bre broken dmm type, grade, , and color. Owners or possessors of tobacco 'c'lh.ose output exceeds a minimum. level established by the statute 42lj are required to the neeessary information to the Secretary on a basis.

The Secretary establishes standards for the classif:tcation of leaf tobacco, demonstrates them by preparing and distributing representative samples designs the forms used to collect the required information, The :information collected can used only for the statistical purposes for which it was supplied, The Seeretary cannot publ"l.sh any data '"hich would identify any particular establishmento~?.:~/ USDA nmy examine the individual reportso

The Interstate Cormnerce Act gov.;;rns most interstate 4 Some vehicles or activities!) however~

transport agricultural Among those exempted are vehicles which

A motor veh:i.cle used by a farmer to transport agricultural horticultural) !JEI or to bring supplies to the farm is not regulated the Interstate Commerce Acto

Vehieles by a cooperative association or by a f.ederation of cooperative associations are also exempted under cert2.in conditionso Any interstate t·ransportat:lon performed these orga-

72

nizations for persons who are not association members, farmers, cooperative associations, or federations must be incidental to the primary transportation operation and necessary for its effec­tive performance.43U/ Such transportation may not exceed 15 percent of the organization's total transportation vo~~e (measured in tons) for any fiscal year. Transportation performed for the federal government or any of its agencies is included in the totaL Before transporting goods for nonmembers, the association or federation must notify ICC of its intent.

A third exemption exists for motor vehicles used to carry ordinary livestock, fish, or agri­cultural commodities (not including the manufactured products made from these commodities) if the vehicles are not used in carrying other property or passengers for compensation.431/ The Act speci­ficies commodities that do and do not fall into these described categories. The ICC also has drawn up a list of "exempt" and "nonexempt" commodities, However, the delineation made in the Act itself takes precedence over the ICC ruling.432/

The agricultural exemption in transportation law has been frequently litigated over the years, In a 1941) case, for example, a trucker Has engaged in a basically intrastate operation and had secured the necessary certificate from state authorities.433/ However, he also used the trucks to transport cotton outside the state. No nonagricultural items were transported on the trips out of state. The court held that these activities were exempt and that the ICC could not require the trucker to obtain an ICC certificate.

The Supreme Court has ruled that a determination by the ICC that a particular commodity is not exempt is reviewable by the courts.~/

An important question in some cases is whether a processed farm product is an "agricultural commodity" or a "manufactured product." In Home Transfer & Storage Co. v=.,.~.~/ fruits and vegetables were processed and frozen prior to shipment. Noting that the fruits and vegetables retained essentially the same shape and form after processing, the court held that they were agri­cultural commodities and thus entitled to the exemption.

Other federal legislation also affects the transportation of agricultural products. A provi­sion of the Agricultural Adjustment Act of 1931) l:!]!:_/ allows the Secretary of Agriculture to have an impact on the costs of transporting farm products by filing a complaint with the ICC with respect to transportation rates, charges, tariffs, and practices.~/ The Secretary may prosecute the complaint before the Connnission. In addition, before hearing any complaint about agricultural transportation rates filed by a person other than the Secretary of Agriculture, the Commission must give due notice to the Secretary, who must be permitted to appear and be heard. The ICC may in turn utilize the records, services, and facilities of the USDA.!~3~/

In any case involving the public interest vJhere rates, charges, tariffs, or practices are challenged, the ICC may m<:tke the Secretary a party to the proceedings.439/ In such a case the Secretary has the rights of a party before the Co~mission, and, consequently, may pursue original and appellate judictal proceedings in regard to the Commission's determination.~/

Not all matters pertaining to the transportation of agricultural products are subject to inter­vention on the part of the Secretary. In !}'~~--U.S.,~/ the Secretary attempted to intervene in an ICC proceeding concerning a charge that a company was transporting meat and poultry products between points in interstate commerce not authorized in its certificate. The court held that since the dispute was not one concerning "rates, charges, tariffs, and practices" of transportation of farm products, the Secretary ~vas not entitled to notice.

Forestry

A provision of the Cooperative Forest Management Act allows the Secretary of Agriculture to provide technical assistance to private landowners who process forest products.422/ The Secretary may cooperate v7ith state foresters in providing technical services to private landm.mers, forest operators, and wood processors with "respect to the harvesting, marketing, and processing of forest products. The assistance is provid.ed in accordance with a plan agreed upon between the Secretary and the appropriate state officiaL This legi.slation also is designed to promote the pro~ tection and improvement of trees and shrubs in urban areas as well as in open spaces.44~_/

73

The Taylor Grazing Act allows the president to place any national forests lands principally valuable for grazing under the administration of the Department of the Interior.444/ These lands remain subject to all public land laws and regulations applicable to grazing districts authorized elsewhere in the Act.

Notes to Chapter 3

1. Act of August 15, 1921, ch. 64, 42 Stat. 159 & (Supp. IV 19~0).

2. 7 U.S.C. §§ 1~1-229 (1976) & Supp. IV 19~0).

3. 25~ u.s. 495 (1922).

4. United States v. Morgan. 307 U.S. 1~3 (1939).

5. Travelers Indemnity Co. v. Manley Cattle Co., 553 F.2d 943 (5th Cir. 1977).

6. Howles v. Albert Glauser, Inc., 61 F.Supp. 43~ (S. Mo. 1945).

7. Bowman v. United States Degertment of Agriculture, 363 F.2d ~1 (5th Cir. 1966).

8. United States Fidelity and Guaranty Co. v. Quin Bros. of Jackson, ~. 3~4 F.2d 241 (5th Cir. 1967).

9. United States v. Marshall Durbin & Co., 363 F.2d'l (5th Cir. 1966).

10. Sioux City Stock Yards Co. v. United States, 49 F.Supp. 801 (D.Iowa 1943).

11. Travelers Indemnity Co. v. Manley Cattle Co., 553 F.2d 943 (5th Cir. 1977).

12. 7 u.s.c. § 191 (1976).

13. 7 U.S.C. § 202.(a) (1976).

14. 7 u.s.c. § 202(b) (1976).

15. Id.

16 • .M.· 17. The term "live poultry dealer" means any person engaged in the business of buying or selling

live poultry in commerce for purposes of slaughter, either on his own account or as the employee or agent of the vendor or purchaser. 7 U.S.C. § 2186 (1976).

1~. 7 u.s.c. § 192(a)(e) (1976).

19. 7 u.s.c. § 192(g) (1976).

20. 7 u.s.c. § 192(f) (1976).

21. Pacific Trading Co. v. Wilson and Co., 547 F.2d 367 (7th Cir. 1976).

22. Swift & Co. v. Wallace, 105 F.2d 848 (7th Cir. 1939).

23. Pacific Trading Co. v. Wilson & Co., 547 F.2d 367 (7th Cir. 1976).

24. 89 F. Supp. 317 (D.C. Neb. 1950).

25. 105 F.2d 84~ (7th Cir. 1939).

26. 7 u.s.c. §§ 201-217(a) (1976).

74

27. 7 u.s.c. § 20l(c) (1976).

2~. 7 u.s.c. § 20l(d) (1976).

29. 7 u.s.c. § 202(b) (1976).

30. 7 u.s.c. § 203 (1976).

31. I d.

32. 7 u.s.c. § 204 (1976).

33. I d.

34. I d. -35. Travelers Indemnit~ Co. case, 553 F .2d 943 (5th Cir. 1977).

36. 7 u.s.c. § 207 (a) (1976).

37. I d.

3~. I d.

39. 7 u.s.c. § 207 (b) (1976).

40. 7 u.s.c. ~ 207(f) (1976).

41. g.

42. 7 u.s.c. § 207(d) (1976).

43. Id.

44. 7 U.S.C. § 211 (Supp. IV 1980).

45. 7 U.S.C. § 2ll(a) (Supp. IV 1980).

46. g.

47. 7 U.S.C. § 2ll(b) (Supp. IV 1980).

48. Flavin, The Packers and Stockyards Act, 1921, 26 Geo.Wash. L.Rev. 161,168 (1968).

49. 9 F.Supp. 864 (D.Neb. 1934).

50. 29~ u.s. 38 (1936).

51. See, e.g., Giles Lowery Stockyards, Inc. v. Department of Agriculture, 565 F.2d 321 (5th Cir. 1977). o

52. Act of August 14, 1935, ch. 532, 49 Stat. 648.

53. Nostrand Poultry Market, Inc. v. United States, 59 F.Supp. 245 (D.N.Y. 1945).

54. The term "live poultry dealer" means any person engaged in the business of buying or selling live poultry in commerce for purposes of slaughter, either on his own account or as the employee or agent of the vendor or purchaser. 7 u.s.c. § 2186 (1976).

55. 7 u.s.c. § 218a(a) (1976).

56. 7 u.s.c. § 28la(b) (1976).

57. Id.

75

Sb. ld.

59, 7 u.s.c. ~ 2lbd (1976).

60. I

63. Id.

64. ~~' Hyatt v. United States, '276 :Fo2d 306 (lOth Cir. 1960),

65. ~~ing Coo v, United States, 15 F.2d 133 (7th Cir. 1926).

67. 7 u.s.c. § 222.

btl. I,<!·

69. 7 u.s.c. § 227 ( (1976),

70. 7 u.s.c. § 227 (a)(l) ( 19 7 6).

7 0 7 UoSnC~ § 227(a)(3) {1976).

72. 7 u.s.c. 9 226 (1976) ·•

7 3. I d.

74. U~~c;_k Yard & Transit Co~~~~ States. 308 U.S. 213 (1939).

76. Id.

77. 7 u.s.c. § 224 (1976).

78.

79. 7 U.S.C. §§ 499a-499s (1976).

82. The term "commission merchant" means any person ·engaged in the business of rece:Lv:tng perishable agricultural commodities for sale, on commission, or on behalf of another. 7 U.S,C. § L}99a(5) (1976).

1:!3. The term '"broker" refers to any person engaged in the business of negotiating sales and purchases of any agricultural commodity for or on behalf of the vendor or purchaser. 7 U.S.C. § L}99(a) ) (1976), Those who do less than $200,000 worth of business in any calendar year are exempted. ld.

1:)4, 7 u.s.c, § LJ99b(l) (1976).

85. 7 u.s,c. § 499a(4) (1976).

86, 7 U.S,L § Lf99a(6) (Supp.IV 1980).

76

87. 7 u.s.c. § 499a(6)(B) (Supp.IV 191.:iU).

!HL 7 u.s.c. § 499a(6)(A) (Supp.IV l':il.:iO).

89. 7 u.s.c. § 499a(6)(C) (Supp.IV 19l:l0). This exception does not apply to cherries in brine or to commodities that are frozen or packed in ice. I d.

90. 7 u.s.c. § 499b(2) (1976).

9L 7 u.s.c. § 499b(3) (1976).

92. 7 u.s.c. § 499b( 4) (1976).

93, ~~~ckers, Inc. v. Pilgrim Fruit Co., 297 F.Supp. 200 (D.Mass. 1969).

94. 227 F.2d 67 (bth Cir. 1955).

95. 7 U.S.C. § 49':ic (a) (1976).

96. 7 u.s.c. § 499c(b) (Supp.IV 19SO).

97. 7 u.s.c. § 499a(6) (Supp.IV 191:\0).

9S. 7 u.s.c. § 499c(c) (1976).

99, 7 u.s.c. § 499c(c) (1976).

lOU. I d.

101. I d.

102. 7 u.s.c. § 499d(b)(B) (1976).

103. 7 u.s.c. § Lf99d(b)(A) (1976).

104. 7 u.s. c. ~ 4Y9d(b) ) (1976).

105. I d.

106. 7 u.s.c. § 49Yi (1976).

l07. I d.

108. 7 u.s. c. » 4Y<:Ie(a) (1976).

lOY. 7 u.s.c. § 499e(b). The Act states that this prOV1S10n does not in any way abridge or modify any other remedies that may be available at common 1a\v or by stature. I d.

110. 7 u.s.c. § 499f(a) (1976).

lll. ).~·

112. 7 u.s.c. § 499f(b) (1976).

113. 7 u.s.c, § 499f(c) (1976).

llb,. 7 u?s,)c!J> ~ J 499f(d) (1976).

ll5' 7 U~S8Co § 499£(c) (1976).

116. 7 u.s.c. § 499f(d) (1976).

l.l7' ;; u.s.c. § 499g(a) {1976).

77

118. 7 u.s.c. § 499g(c) (1976).

119. 7 u.s.c. § 491-497 (1976).

120. Farm produce refers to any fruits, vegetables, melons, dairy or poultry products or any perishable farm products of any kind. 7 U.S.C. § 491 (1976).

121. Id.

122. Act of March 3, 1927, ch. 309, 44 Stat. 1355.

123. Act of June 10, 1930, ch. 436, 46 Stat. 531.

124. 7 u.s.c. § 496 (1976).

125. I d.

126. 7 u.s.c. § 491 (1976).

127 • .!i·

128. 7 u.s.c. § 494 (1976). The regulations for the enforcement of the Produce Agency Act are found at 7 C.F.R. Part 48 (1978).

129. 7 u.s.c. § 494 (1976).

130. 7 u.s.c. § 494 (1976).

131.

132. 7 u.s.c. §§ 1551-1661 (1976).

133. E. K. Hardison Seed Co. v. Jones, 149 F.2d 252,256 (6th Cir. 1945).

134. Id. at 256.

135. Seeds are considered to be of basically two types under the Act• "Agricultural seeds" are grass, forage, and field crop seeds. 7 U.S.C. § 156l(a)(7)(A) (1976). "Vegetable seeds" include the seeds of those crops that are or may be grown in gardens or on truck farms, or may be generally known and sold under the name of vegetable seeds. 7 U.S.C. § 156l(a)(7)(B) (1976).

136. 7 u.s.c. § 1571 (1976).

137. 7 u.s.c. § 157l(a)(l), 157l(b)(l)(A) (1976).

138. 7 u.s.c. § 157l(a)(3) (1976).

139. 7 u.s.c. §§ 157l(a)(l) (1976).

140. 7 u.s. c. § 1571 (a)(7) (1976).

141. 7 u.s.c. §§ 157l(a)(9), 157l(b)(l)(B) 1571 .!!,)(2)(cj, 157l(b)(3)(d)

142. 7 u.s.c. § 1593(a) (1976).

143. 7 u.s.c. § 1593(a) (1976).

144. 7 u.s.c. § 1592(b) (1976).

145. 7 u.s.c. § 1593(b) (1976). The regulations for the Federal Seed Act are found at 7 C.F.R. Part 201 (1977).

146. 7 u.s.c. § 1593(a) (1976).

78

147. E. K. Hardison Seed Co. v. Jones, 149 F.2d 252 at 256 (6th Cir. 1945).

148. 7 u.s.c. § 1595 (1976).

149. 7 u.s.c. § 1598 (1976).

150. 7 u.s.c. § 1598 (1976). society, or association.

The term "person" includes a partnership, corporation, company, 7 u.s.c. § 156l(a)(2) (1976).

151. 7 u.s.c. § 1595(b) (1976).

152. 7 u.s.c. § 1595(b)(2) (1976). Additional penalties are provided for by the Act. See 7 u.s.c. §§ 1596, 1599 (1976).

153. 94 F.Supp. 523 (D.Miss. 1946).

154. Connolly v. Un~on Sewer Pipe Co., 184 U.S. 40 (1902). Cooperatives had unsuccessfully attempted to obtain an exemption in the Sherman Act (15 U.s.c. §§ 1-7 (1976) when it was being considered by Congress in 1890. 21 Cong.Rec. 2726 (1890).

155. These three statutes are covered quite extensively in another monograph in the NC-117 series: W. Grant, D. Dahl, L. Geyer, and J. Kennedy, ~ederal Antitrust Pol~cy and the u.s. Food System (1985).

156. 7 u.s.c. §§ 2301-2306 (1976).

157. 14 u.s.c. § 17 (1976).

158. 7 u.s.c. §§ 291,292 (1976).

159. 7 u.s.c. § 291 (1976).

160. Id.

161. 7 u.s.c. § 292 (1976).

162. Id.

163. 7 u.s.c. § 455 (1976).

164. ~·

165. Act of April 16, 1978, Pub.L.No. 90-288, 82 Stat. 93, as amended, 7 U.S.C. §§ 2301-2306 (1976).

166. The term "agricultural products" does not include cotton or tobacco or their products. 7 u.s.c. § 2302(e) (1976).

167. 7 u.s.c. § 2301 (1976).

168. Id.

169. The term "handler" means any person engaged in the business or practice of (1) acquiring agricultural products from producers or associationsof producers for processing or sale, or (2) grading, packaging, handling, scoring, or processing agricultural products received from pro­ducers or associations of producers, or (3) contracting or negotiating contracts or other arrangements, with or on behalf of producers or associations of producers with respect to the production or marketing of any agricultural product, or (4) as an agent or broker for a handler in the performance of any functions or acts prohibited above. 7 u.s.c. § 2303(a) (1976).

170. 7 u.s.c. § 2303(a) (1976). An "association of producers" means any association of producers of agricultural products engaged in marketing, bargaining, shipping, or processing. 7 u.s.c. § 230 (c) (1976).

79

171. 7 u.s.c. § 2303(a) (1976).

172. 7 u.s.c. § 2303(b) (1976).

173. 7 u.s.c. § 2303(c) (1976).

174. 7 u.s.c. § 2303(e) (1976).

175. 7 u.s.c. § 2303(£) (1976).

176. 7 u.s.c. § 2304 (1976).

177. I d.

17~. Butz v. La~son Milk Co., 386 F.Supp. 227 (D.Ohio 1974).

179. 7 u.s.c. § 2305(b) (1976).

usa. 7 u.s. c. § 2305(a) (1976).

U:!l. g.

182. 7 u.s.c. § 2305(c) (1976).

183. Act of June 3, 1937, ch. 296, 50 Stat. 246, as amended, 7 u.s.c. §§ 601-624 (1976).

184. Act of May 12, 1973, ch. 25, 48 Stat. 31.

185. 7 u.s.c. § 601 (1976).

186. 7 u.s.c. § 602(1)(1976). Parity prices are defined at 7 U.S.C. § 1301 (a)(l976).

187. 7 u.s.c. § 602(2)(1976).

1~8. 7 U.S.C. § 608(c)(l8) (Supp.IV 1980).

189. 7 u.s.c. § 608c(l) (1976).

190. The regulated agricultural commodities are listed in 7 u.s.c. § 608c(2) (1976).

191. 7 u.s.c. § 608b (1976).

192. g.

193. United States v. Wright1and Dairy Co., 127 F.2d 907 (7th Cir. 1942).

194. 7 U.S.C. § 608c (1976) & (Supp.IV 1980).

195 • .!.!!·

196. 7 u.s.c. § 608(3) (1976).

197. 562 F.2d 1305 (1939).

198. 7 u.s.c. ~ 608c(3) (1976).

199. Id.

200. 7 u.s.c. § 608c(19) (1976).

201. 7 u.s.c. § 608c(9)(A) (1976).

202. 307 u.s. 588 (1939).

80

:2.03. 7 u.s.c. § 608c(l2) (1976).

204. 342 F.Supp. 8B (D.Minn. 1972).

205. 7 u.s.c. § 60Sc(5) (1'176) & (Supp.IV 1980).

206. 7 UaS.-CJt ~ 608c(6) (1976) & (Supp. IV 1980).

207. 7 u.s.c. § 608c(7) (1976).

201:L 7 u.s.c. § 608c(l0) (1976).

209. 7 u.s.c. § 608c(15)(A) (1976). 7 C.F.R. 900.50 (1978).

210. I d.

211. 7 u.s.c. § 60Hc(15)(B) (1976).

212. 7 u.s.c. § 608c(16)(B) (1976).

213. 7 u.s.c. § 60Bc(16)(B) (1976).

214. I d.

215. Nebbia v. New YoE_i<:_, 291 U.S. 502 (1934).

216. 7 U.S.C. § 608c(5) (1976) & (Supp.IV 1980).

217. Id.

218. 7 u.s.c. § 608c(5)(D) (1976).

219, Brooks, The M'!E,.keting of F'lrm Products under Some of the Federal Regulatory Statutes, 6 s.c.L.Q. 247, 269 (1954).

220, United States~· Rock Royal Co-op, 307 U.S. 533 (1939),

222. 307 u.s. 533 (1939).

223, Id. at 571.

224. Oak Tree Farm Dairy, Inc. v. Butz, 390 F.Supp. 852 (D.N.Y. 1975),

225. 7 U.S.C. § 608c(6)(A) (1976).

226. 7 u.s.c. § 608c(6)(B) (1976),

227, I d.

22H. 7 u.s.c. § 608c(6)(D) (1976).

229. 7 u.s. c. § 608c(6)(E) (1976).

230. 7 u.s.c. § 608c(6)(F) (1976).

23L 7 u.s.c. § 608c(6)(H) (1976).

232. 7 u.s.c. § 608c(6 )(I) (Supp.IV 1980)'

233. I d.

234. 7 U.S.C. § 608c(ll)(B) ),

81

235. 7 u.s.c. § 60~c(ll)(A) (1976).

236. The Agricultural Marketing Service regulations are found at 7 C.F.R. Parts 945-1139. Each order specifies handler status. Another type of handler is the producer-handler, who is generally exempt from all but the reporting requirements.

237. 7 u.s.c. § 60~c(7)(C)(i) (1976).

23~. 7 u.s.c. § 60~c( 7) (C)( ii) and (iii) (1976).

239. 7 u.s.c. § 60~c(7)(C)(iv) (1976).

240. 7 u.s.c. § 610(b)(2) (1976).

241. 7 u.s. c. § 60~d (1976).

242. 7 u.s.c. § 60~d(l) (1976).

243. I d.

244. g.

245. 7 u.s.c. § 60~d(2) (1976).

246. 7 u.s.c. § 60~a(5) (1976).

247. 7 u.s.c. § 608c(l4) (1976).

24~. Panno v. u.s., 203 F.2d 504 (9th Cir. 1953).

249. The Futures Trading Act was struck down in Hill v. Wallace, 259 U.S. 44 (1922).

250. Act of September 21, 1922, ch. 369, 42 Stat. 99~.

251. A historical account of these early efforts is presented in Johnson, The Futures Trading Commission Act: Selected Challenges to ~riculture, 1976 U. Ill. L.F. 509, 512-516.

252. Act of June 15, 1936, ch.

253. 7 U.S.C. § 2 (Supp.IV 19~0).

254. Act of Feb. 19, 196~, Pub.L.No. 90-25~, § 6, 82 Stat. 27.

255. Act of Oct. 23, 1974, Pub.L.No. 93-463, 88 Stat. 1389, as amended, 7 u.s.c. §§ 1-22 (1976).

256. 7 U.S.C. § 4a (1976) & (Supp.IV 19~0).

257. 7 U.S.C. § 4a(a)(l)(Supp.IV 1980).

258. 7 U.S.C. § 4a(g)(Supp.IV 1980).

259. 7 u.s.c. § 1 (1976).

260. 7 u.s.c. § 12 (1976).

261. 7 U.S.C. § 12(e) (Supp.IV 1980).

262. Onions are excepted from this definition. 7 u.s.c. § 2 (Supp. IV 1980).

263. Id.

264. The words "board of trade" are defined as any exchange or association, whether incorporated or unincorporated, of persons who are engaged in the business of buying or selling any commodity, or receiving any commodity for sale or for consignment. 7 u.s.c. § 2 (Supp.IV 1980).

82

2.65. 7 u.s.c. § 6 (H76).

266. ld.

2.67. ~-

2.68. 7 u.s.c. § 7 (1976).

269. 7 u.s.c. § 7(a) (1976).

270. 7 u.s.c. § 7(b) (1976).

271. 7 u.s.c. § 7(c) (1976).

272. I d.

273. 7 u.s.c. § 7(d) (1976).

274. 7 u.s.c. § 7(e) (1976).

275. ld_.

276. 7 u.s.c. ~ 7a(l) (1976).

277. 7 u.s.c. § 7a(2) (1976).

278. 7 u.s.c. § 7a(3) (1976).

279. 7 u.s.c. § 7a(l2) (Supp.IV 1980).

280. 7 &.S.C. § 7a(8) (1976).

281. 7 u.s.c. § 7a(l2) (1976).

282. I d.

283. 7 u.s.c. § 7a(6) (1976).

284. 7 u.s.c. §§ 241-273 (1976).

285. 7 u.s.c. § 7a(7) (1976).

286. I d.

287. A "futures commission merchant" is an individual, association, partnership, corporation, or trust engaged in soliciting or accepting orders for the purchase or sale of any commodity for future delivery on or subject to the rules of any contract market and that accepts money, securities, or property (or extends credit) to margin, guarantee, or secure any trade or contracts that result from that activity. 7 U.S.C. § 2 (Supp.IV 1980).

288. 7 U.S.C. § 6d(l)(Supp.IV 1980).

289. 7 U.S.C. § 6d(2)(Supp.IV 1980).

290. A floor broker is any person who, in or surrounding any pit, ring, post, or other place pro­vided by a contract market for the meeting of other persons similarly engaged, purchases or sells for any other person commodity futures contracts subject to the rules of the contract market. 7 U.S.C. § 2 (Supp.IV. 1980).

291. 7 u.s.c. § 6e(l976).

292. 7 U.S.C. § 6f(l) (Supp.IV 1980).

293. ld.

83

294. I d.

295. 7 u.s.c. § 6f(2)(1976).

296. M.·

297. 7 u.s.c. § 6p (1976).

298. Id.

299. A "commodity pool operator" is defined as a person engaged in a business which is of the nature of an investment trust, syndicate, or similar form of enterprise, and who solicits or receives from others, funds, securities, or properties for the purpose of trading in any commodity for future delivery. 7 U.S.C. § 2 (Supp.IV 1980).

300. 7 u.s.c. § 6n(l) (1976).

301. 7 u.s.c. § 2 (Supp.IV 1980).

302. I d.

303. Id.

304. 7 u.s.c. § 6o(l) (Supp.IV 1980).

305. 7 u.s.c. § 6o(2) (1976).

306. 7 u.s.c. § 6a(l) (1976).

307. 7 u.s.c. § 6a(l) (1976).

308. 7 u.s.c. § 6a(3) (1976).

309. 7 u.s.c. § 6g(l) (1976).

310. 7 u.s.c. § 6g(2) (1976).

311. 7 u.s.c. § 6g(3) (Supp.IV 1980).

312. 7 u. s.c. § 6g( 4) (1976).

313. 7 u.s.c. § 6g(5) (1976).

314. I d. --315. 7 u.s.c. § 6g(6) (1976).

316. 7 u.s.c. § 2l(a) (1976).

317. 7 u.s.c. § 2l(b)(l)(l976).

318. 7 u.s.c. § 2l(b)(2)(1976).

319. 7 u.s.c. § 12 (Supp.IV 1980).

320. I d.

321. Id.

322. 7 u.s.c. § 12(f)(Supp.IV 1980).

323. ld.

324. 7 u.s.c. § 22 (1976).

84

325. 7 U.S.C. § 19 (Supp.IV 1980),

326. Id,

327. Ricci v. Chicago Mercantile Exchange, 409 U.S. 289 (1973).

328. I d.

329. Act of October 8, 1976, Pub.L,No. 94-463, 90 Stat. 1982. 7 u.s.c. §§ 3001-06 (1976).

330. 7 u.s.c. § 3001 (1976).

331. 7 u.s.c. § 3002 (1976).

332. 7 u.s.c. § 3003 (1976).

333. Id.

334. 7 u.s.c. § 3004 (1976).

335. 7 u.s.c. § 3004(a) (1976).

336. I d.

337. 7 u.s.c. § 3004(a)(l) (1976).

338'. 7 u.s.c. § 3004(a)(2) (1976).

339. 7 u.s.c. § 3004(a)(4) (1976).

340, 7 u.s.c. § 3005 (1976), The appropriate committees are the House Committee on Agriculture, and. the Senate Committee on Agriculture, Nutrition and Forestry.

341. Id.

342. 7 u.s.c. § 2611 (1976).

343. 7 u.s.c. § 2613 (1976).

344. 7 u.s.c. § 2612(d) (1976).

345. 7 u.s.c. § 2613.

346, Id. -347. 7 u.s.c. § 2614 (1976).

348. Id.

349. 7 u.s.c. § 2623 (1976).

350, Id. In the latter case, a majority of the producers voting must favor the plan.

351. 7 u.s.c. § 2624(b) (1976).

352. 7 u.s.c. § 2623 (1976).

353. 7 u.s.c. § 2617(a) (1976).

354. The term "producer" includes any person engaged in the growing of five or more acres of potatoes. 7 u.s.c. § 2612(e) (1976).

355. 7 u.s.c. § 2617(b) (1976).

85

356. 7 U.S.C. § 2617(a)(2) (1976).

357. 7 u.s.c. § 2617(a)(3) (1976).

35B. 7 U.S.C. § 2617(a)(4) (1976).

359. 7 u.s.c. § 2617(d) (1976).

360. 7 u.s.c. § 2617(e) (1976). However, the assessment rate cannot exceed one percent of the value of the potatoes handled.

361. 7 u.s.c. § 2617(g) (1976).

362. 7 u.s.c. § 261B(f) (1976).

363. 7 u.s. c. § 2618(e) (1976).

364. I d.

365. 7 u.s.c. § 2617(f)(3) (1976).

366. 7 u.s.c. § 2617(f)(2) (1976).

367. Act of May 28, 1976, Pub.L.No. 94-294, § 1, 90 Stat. 529.

368. 7 u.s.c. § 2901 (1976).

369. 7 u.s. c. § 2903 (1976).

370. "Slaughterer" means any person, specified in the order itself or in the rules and regulations of the order, who slaughters cattle, including cattle of his own production. 7 u.s.c. § 2903(q) (1976).

371. 7 u.s.c. § 2904 (1976).

372. 7 U.S.C. § 2908 (Supp.IV 1980).

373. Previously the requirement was for a two-thirds majority in favor of the order but this provi­sion was amended in 1978 to reduce the requirement to a simple majority. Act of Aug. 4, 1978, Pub.L.No. 95-334. Title III, § 302, 92 Stat. 443, 7 U.S.C. § 2908 (Supp.IV 1980).

374. 7 u.s.c. § 2906(a) (1976).

375. Id.

376. 7 u.s.c. § 2907 (1976).

377. Id.

378. 7 u.s.c. § 2907(c) (1976).

379. 7 u.s.c. § 2907(d) (1976).

380. 7 u.s.c. § 2907(e) (1976).

381. 7 u.s.c. § 2907(e)(2) (1976).

382. 7 u.s.c. § 2907(e)(l) (1976).

383. 7 u.s.c. § 2911 (1976).

384. Act of September 29, 1977, Pub.L.No. 95-113, Title XVII, § 1701, 91 Stat. 1031.

3B5. 7 U.S.C. § 3403 (Supp.IV 1980).

86

386. The term "end product" means any product which contains processed wheat as an ingredient and which is intended for consumption as human food, not withstanding any incidental preparation which may be necessary by the ultimate consumer. 7 U.S.C. § 3402(c)(Supp.IV 1980).

387. 7 u.s.c. § 3404(a)(Supp.IV 1980).

388. 7 u.s. c. § 3405(a)(Supp.IV 1980).

389. 7 u.s.c. § 3405(a)(3)(Supp.IV 1980).

390. 7 u.s.c. § 3405(e)(Supp.IV 1980).

391. I d.

392. 7 u.s.c. § 3405(f)(Supp.IV 1980).

393. Id.

394. Any end product manufacturer who is a retail baker is exempt from the provisions of this Act. 7 U.S.C. § 3406 (Supp.IV 1980).

395. 7 U.S.C. § 3407 (Supp.IV 1980).

396. 7 U.S.C. § 3411 (Supp.IV 1980).

397. Act of October 1, 1974, Pub.L.No. 93-428, § 1, 88 Stat. 1711. The federal regulations governing egg research and promotion are found at 7 C.F.R. Part 1250 (1978).

398. 7 u.s.c. § 2703 (1976).

399. 7 u.s.c. § 2701 (1976).

400. 7 u.s.c. § 2703 (1976).

401. 7 u.s.c. § 27U7(d) (1976).

402. 7 u.s.c. § 2707(a)(3) and (4)(Supp.IV 1980).

403. 7 u.s.c. § 2707 (b)(Supp. IV 1980).

404. 7 u.s.c. § 2707(b)(Supp.IV 1980).

405. 7 u.s.c. § 2707(b)(Supp.IV 1980).

406. 7 u.s.c. § 2715 (1976).

407. 7 u.s.c. § 2715(g) (1976).

408. 7 u.s.c. § 2707(c) (1976).

409. 7 u.s.c. § 2707 (d) (1976).

410. 7 u.s.c. § 2707(e)(Supp.IV 1980).

411. I d. In fiscal 1981, the assessment rate could not exceed 7 1/2 cents per case.

412. 7 u.s.c. § 2707(h) (1976).

413. 7 u.s.c. § 2712 (1976).

414. 7 u.s. c. § 2709 (1976).

415. I d.

87

Lf 16, 7 u.s.c. § 2710 (1976).

417. 7 u.s.c. § 2711 (1976).

410. 7 u.s.c. § 27ll(a) (1976).

419. 7 u.s.c. § 2711{ b) (1976)"

420. 7 u.s.c. § SOL (H76).

421, lsi.·

422. 7 u.s.c. § 503 (1976).

423" 7 u.s.c. § 502 (1976).

424 0 7 u.s.c. § 507 (1976).

425. Lf9 u.s. c. § 10101 (Supp.III 1979).

426. 49 u.s.c. § 10526 (Supp.III 1979).

427, 49 U.S.C. § 10526(a) (Supp.III 1979). In Florida Gladiolas Association v. U.S., 106 F.Supp. 525 (D. Fla. 1Y52), the court invalidated an order of the ICC which-held that nursery stock, flowers, and bulbs were not agricultural products, The court noted that "horticulture" is included in the term "agriculture."

421). 49 U,S.C. § 10526( (Ll)(B)(Supp.III 1979).

429. The federation cannot posses greater or purposes than the cooperatives themselves. 49 U.S.C. § 10526(a)(S) Supp.III 1979 •

430. Id.

431. 49 U.S.C. § l0526(a)(6)(Supp.III 1979),

432. Id.

433 • .!E£.~at_e Commerce Commission v. Dum~, 166 F.2d 116 (5th Cir. 19Lf8).

434. Frozen -~ood~ess v. U.S., 351 U.S. 40 (1956).

435. 141 F.Supp. 599 (D.Wash. 1956).

436. Act of February 16, 1938, ch. 30, 52 Stat. 36

437. 7 u,s.c. § l29l(a) (1976).

43H. 7 u.s.c. I 1291( 1976).

439. 7 U.S.C. § 129l(b) (1976). The of the Secretary in any such case would extend to the liability for court costs. Id.

440. Id. ~

441. 128 F.Supp. 37Lf (D.Tex, 1955), revised on other grounds 351 U.S. 40 (1956), and affirmed 351 u.s. 40 (1956).

442. 16 u.s.c. § 568(c) (1976).

ll43. Id,

444. 43 u.s.c. § 3151 (1976).

88

Chapter 4

COMPARISON OF REGULATORY SCHEMES

The regulations promulgated for the various agricultural commodities are similar in many respects. The regulatory programs established for beef,!/ eggs,!/ and potatoes ll illustrate this point.

In each of the three programs, promotion plans may be proposed by producers, or the Secretary of Agriculture, or other interested persons.4/ A written application and a copy of the proposal must be filed with the Administrator of the Agricultural Marketing Service,S/ who then initiates an investigation of the proposed plan. If the Administrator concludes that a hearing should be con­ducted, notice of the hearing must be given. If the Administrator concludes that the plan will not effectuate the policy of the Act, the application may be denied and a hearing is not conducted. The unsuccessful applicant must be notified of the decision and of the reasons for the denial.

Any.interested person may participate in a hearing.6/ Oral arguments may be presented before an administrative law judge,7/ and written briefs may be filed.8/ Any objections to the plan should be aired at the hearing. -All testimony is preserved in a tr;nscript.!/

The Administrator makes a recommended decision based on the proceedings of the hearing.lO/ This decision must describe the history of the proceedings, explain the issues of fact or law raised by the record, proposed findings and conclusions, and formulate a plan to effectuate the recommen­dations.ll/ Parties who disagree with the recommendations may file briefs explaining their objec­tions.l2~ After the period allowed for filing exceptions has expired, the recommended decision of the Administrator and the hearing transcript are sent to the Secretary's office.l3/ The Secretary then reaches a decision based on these documents, ruling on any exceptions that have been filed. The Secretary may then issue a plan or order if it has been approved by the procedures specified elsewhere in the Act.l4/ The plan or order normally cannot become ef~ective until thirty days after its publication~n the Federal Register. The Secretary can select an earlier effective date if there is good reason for taking this action.Jl/

The regulations prohibit USDA employees from discussing the evidence or issues involved in any proposed plan with any of the interested parties after the hearing but prior to the issuance of the plan. 16/ However, the judge supervising the hearing may discuss matters of procedure related to the h~ing with interested parties.ll/

The Secretary may act as a judge in any hearing.l8/ The Secretary may issue a tentative deci­sion before the final decision.~/ In that event, the-parties to the hearing may file exceptions before the final decision is made.

The procedures for conducting referenda on research and promotion orders are similar for egg and potato producers, but somewhat different for beef producers.ZO/ The purpose of all three, however, is to determine whether an order or the suspension of an-order is favored by the producers.Zl/

Each egg producer or potato producer is entitled to one vote in the referendum.22/ The referendum is conducted by a referendum agent under the supervision of the Administrator. The Administrator may prescribe instructions in addition to the established regulations as long as they are consistent with the established regulations.23/ The referendum agent determines the beginning and end of the referendum, the time by which al~allots must be received,24/ and whether ballots will be cast by mail, at polling places, or at meetings of producers.25/ --

The material issued with each ballot requests information used to determine voter eligibility.26/ Information is also collected on the total volume of commodities produced during the representativ; period.27/ The referendum agent tabulates the balloting results and reports the out­come to the Administrator.28/

For beef referenda, producers are required to register with the ASCS office in the county in which their farm or ranch headquarters are located.29/ A list of registered producers is prepared and posted daily at the county ASCS office during the registration period.30/ A final list is posted on the fifth day after the close of the registration period. --

89

Producers may vote in person or by mail. 31/ Each county ASCS office must provide facilities for voting in person.32/ Ballots may be mailed only to producers who have registered to vote.33/ Voting is by secret ballot, although the public may witness the opening of the ballot box and the counting of the ballots

The county ASCS office must notify the state ASCS office of the results of the referendum 35/ before it releases the unofficial results to the A final report must be filed with the state office within seven days of balloting.36/ Questions about a producer's eligibility must be settled before that time.37/ A summary of the report must be posted in the county ASCS office for public inspection for thirty dayso38/

The state ASCS office collects the preliminary referendum results from each county office and sends the Deputy Administrator of the Agricultural Marketing Service a summary.l2./ It may then release the unofficial state results to the public.40/ A final report from the state ASCS office must be submitted to the Deputy Administrator withi;;-ten days of ballotl.ng.41/ The state office must also maintain one copy of its report for public inspection for one year.l<2/ The Deputy Administrator submits the results to the Secretary, and they ln turn are publlS'hed in the Federal Register.43/

The three regulatory programs also differ in r·egard to bonding requirements. In the case of a proposed beef order, a bond must be posted lftThich is sufficient to cover the cost of preparing an order or conducting a referendum.4L•/ The exact amount of the bond required is determined the Secretary. If a beef referendum fails to recel.ve the necessary approval, the bond is forfeited to cover the expenses. No similar bonding regulations exist for egg or potato orders.

1. 7 C.F.R. Pext 1260

2c. 7 C.F.R. Part 12.50

,, Jo 7 C.F.R. Part 1207 ).

4. 7 C.F.R. I 1260.3 (1981) (beef); 7 C.F.R. I 1250.3 (eggs); 7 C. F. R. § 1.207. 3 (1981) ).

5. Id. Ho'l"wever, these requirements do not apply if the Secretary of Agriculture proposes the plan.

6. 7 C.F.R. § 1260.10(b) (1981). 7 C.F.R. § 1250o (1981); 7 C.F.R. § 1207.8(b) (1981). Unless otherwise indicated, the citations will be given first for beef, then for eggs, and then finally for potatoes.

7. 7 C.F.R. I 1260. (1981); 7 C.F.R. I 1250.9(a) 7 C.F.R. I 1207.9(a) (1981).

8. 7 C.F.R. I l260.1l(b) 7 C.F.R. § 1207.9 (1981).

9. 7 C.F.R. § 1260.12 (1981) 7 C.F.R. I 125U.l0 7 C.F.R. I 1207.10

10. 7 C.F.R. I 1260.14 (1981); 7 C.F.R. § 1250.12 (1981); 7 C.F.R. I 1207.12 (1981).

(1981); 7 C.F.R. I 1250.12 1 C.F.R. § 1207.12(b) (1981).

12. 7 C.F.R. § 1260.14( (1981); 7 C.F.R. § 1250.12(c) (1981); 7 C.F.R. § 1207.12( (1981).

13. 7 C.F.R. § 1260.15 (1981); 7 C.F.R. § 1250.13 ; 7 C.F.R. I 1207.13 (1981).

14. 7 C.F.R. I 1260.17 (1981.); 7 C.F.R. I 1250.15(a) 7 C.F.R. § 1207. (1981).

15. 7 C.F.R. I 1.260.17 7 C.F.R. § 1250.15 7 C.F.R. §

16. 7 C.F.R. I 1260.19 7 C.F.R. I 1250.17 (1981); 7 C.F.R. I 1207.17 (1981).

90

17. Id. This section prevails over any provisions of Regulation 1544 of the regulations of the ~DA that are inconsistent.

18. 7 C.F.R. § 1260.21 (1981); 7 C.F.R. § 1250.19 (1981).

19. Id.

20. 7 C.F.R. § 1260.200 to 1260.ll7 (1981); 7 C.F.R. §~ 1250.200 to 1250.207 (1981); 7 C.F.R. ~§ 1207.200 to 1207.207 (1981).

21. 7 C.F.R. ~ 1260.200 (1981); 7 C.F.R. ~ 1250.200 (1981); 7 C.F.R. § 1207.200 (1981).

n. 7 C.F.R. § 1250.202 (1981); 7 C.F.R. § 1207.202 ( 1981).

23. 7 C.F.R. § 1250.203 (1981); 7 C.F.R. § 1207.203 (1981).

24. 7 C.F.R. § 1250.203(a) (1981); 7 C.F.R. 9 1207 .203(a) (1981).

25. 7 C.F.R. § 1250.203(b) (1981); 7 C.F.R. § 1207.203(b) (1981).

26. 7 C.F.R. § 1Z50.203(c)(l) (1981); 7 C.F.R. ~ 1207 .203(c)(1) (1981).

27. 7 C.F.R. § 1250.203(c)(2) (1981); 7 C.F.R. § 1207 .203(c)(3) (1981).

28. 7 C.F.R. § 1250.203(h) (1981); 7 C.F.R. § 1207 .203(h) (1981).

29. 7 C.F.R. § 1260.207(a) (1981).

30. 7 C.F.R. § 1260.207 (b) (1981).

31. 7 C.F.R. § 1260.208(b) (1981).

32. 7 C. F. R. § 1260.208(a) (1981).

33. 7 C.F.R. § 1260.208(b) (1981).

34. 7 C.F.R. § 1260.211(c) (19!H).

35. 7 C.F.R. § 1260.212(a) (1981).

36. 7 C.F.R. § 1260.212 (b) (1981).

37. ~-

38. I d.

39. 7 C.F.R. § 1260.213(a) (1981).

40. ,g.

41. 7 C.F .R. § 1260.213(b) (1981).

42. I d.

43. 7 C.F .R. § 1260. 214(a) (1981).

44. 7 C.F.R. § 1260.4 (1981).

91

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